Bullion leaps as traders grasp western weaker-than-expected “sanctions”and imminent rate hike   

25 Feb 2022: Gold has had a rather see-saw - ish journey these part couple of days, after rising to its highest in more than 17 months, it fell and just a day after it rose again, owing to traders digesting the impact of the unprovoked Russian invasion of Ukraine and western sanctions against the imminent monetary policy tightening in the U.S.

According to Goldman Sachs Group Inc, Gold could soar even higher if a resulting commodity price spike leads to concerns of a material slowdown in growth in developed markets, according to Goldman Sachs Group Inc (NYSE:GS).

U.S President Joe Biden imposed “harsh” penalties on Russia, which impairs 5 behemoth Russian banks from gaining access to any foreign currency. Although Russia is still allowed access to Swiss International payments. Russian crude supplies also basked in the glory of getting spared.

Russian forces have moved closer to Ukraine’s capital, Kyiv, and this is quickly becoming one of Europe’s worst security crises since World War II .

Federal Reserve officials doesn’t seem to be wavering in their track to raise interest rates next month -- this puts pressure on the need to confront the hottest U.S. inflation in 40 years -- despite all the ongoing geo-political tensions. Higher rates could weigh on non-interest bearing gold.

“In the near term, the safe-haven bid amid an equity selloff coupled with lower real yields has been the overriding factor and risk-off flows will continue to dominate” gold, RBC Capital Markets strategists led by Christopher Louney, said in a report dated Feb. 24.

Spot Gold rose 0.4% to $1,910.72 an ounce at 9:30 a.m. in Singapore. Prices jumped to $1,974.34 on Thursday, the highest level since September 2020, before ending 0.3% lower. The Bloomberg Dollar Spot Index was little changed. 

Silver and platinum both followed suit in Gold’s rise. Palladium edged higher following big swings in the previous session on concerns over potential supply disruptions considering Russia produces about 40% of the palladium mined globally.

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