(Bloomberg) -- Gold held an advance as investors waited for potential new sanctions against Russia that could further burnish the metal’s haven appeal.
The U.S. and European Union are close to a deal aimed at slashing Europe’s dependence on Russian energy, ahead of President Joe Biden’s meetings with allies in Brussels. Moscow, meanwhile, said it plans to demand ruble payments from European nations for natural gas purchases, sending prices higher.
The war and ensuing sanctions have pushed up commodity prices and inflation, resulting in faster monetary tightening from some central banks. The Federal Reserve’s more hawkish tone and higher U.S. bond yields are weighing on non-interest bearing bullion, but it’s also benefiting from its appeal as a hedge against consumer-price gains. Holdings in gold-backed exchange-traded funds are the highest in more than a year, initial data compiled by Bloomberg show.
Federal Reserve officials said Americans should take them at their word that they will act to curb inflation and repeated that a 50 basis-point increase in interest rates is on the table for their next meeting in May. Ten-year Treasury yields are up sharply this month and reached the highest since 2019 this week.
“Bullion has weathered the Fed storm,” said Stephen Innes, managing partner at SPI Asset Management Pte. Any additional sanctions on Russian energy could fuel inflation expectations, which would be favorable for gold, he said.
Spot gold rose was little changed at $1,944.37 an ounce as of 9:26 a.m. in Singapore, after climbing 1.2% on Wednesday. The Bloomberg Dollar Spot Index added 0.1% after gaining 0.1% in the previous session. Palladium advanced, silver was steady, while platinum edged lower.
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