KUALA LUMPUR – News of Western nations intending to ban imports of gold from Russia resulted in the prices of gold rising on June 27.
Reuters reports that the price of spot gold increased by 0.5% to US$1,835.58. Gold futures for the US also rose by 0.3% at US$1,836.30.
According to OANDA senior analyst, Jeffrey Halley, the import ban on Russian gold by the G7 appears to be providing some short-term support in early Asia trading.
“However, it is mostly a rubber stamp exercise for the grouping in reality, and I do not anticipate that this would reflect a structural change in the supply and demand outlook that will underpin pricing,” he said.
On June 26, four of the G7 wealthy nations had decided to impose import bans for Russian gold in order to increase the sanction squeeze on Moscow by cutting off its means of financing the invasion of Ukraine.
SPI Asset Management managing partner, Stephen Innes, said that the headline will be quickly digested and that the market would return back to its tug-of-war between higher front-end rates, which are negative for gold and recession odds, which means sooner rate cuts that are positive for gold.
A couple of the US central bankers stated on June 24 that they supported further sharp rate increases to curb rapid price hikes, even as investors celebrate economic data that shows inflation expectations to be less worrisome than first feared.
Gold is commonly thought of as a hedge against inflation. However, when interest rates are high, the the opportunity cost of holding bullion also increases but it yields no interest.
“Overall, gold remains bogged in the middle of the US$1,780 to US$1,880 range that has been in place since early May. We will need a major directional move by the US dollar in order to change that dynamic,” said Halley.
Meanwhile, the price of spot silver increased by 1.2% to US$21.36 per ounce while platinum climbed 0.5% to reach US$912.00 and the price of palladium rose by 0.6% to US$1,886.65 as of current writing time.
Join our Telegram group for the latest updates!
Read more: Strengthening timber ties between Vietnam and Malaysia
Discussion about this post