LONDON: Gold rose on Monday as the dollar weakened and economic concerns persisted, while an import ban on the metal from Russia by four of the G7 countries also supported prices to some extent.
Spot gold was up 0.7% at $1,838.10 per ounce by 0937 GMT. US gold futures rose 0.5% to $1,839.50.
Britain, the United States, Japan and Canada will ban new imports of Russian gold to tighten the sanctions squeeze on Moscow for invading Ukraine.
Russia is the world’s third largest gold producer and accounts for about 10% of the global production.
But the relatively “moderate reaction shows that the implications of a ban on the gold market are likely very limited, rather reflecting improving sentiment than improving fundamentals,” said Carsten Menke, Head Next Generation Research, Julius Baer.
A weaker dollar makes the metal cheaper for overseas buyers.
Rising interest rates, however, will continue to weigh on gold prices over the next six months, said UBS analyst Giovanni Staunovo.
While gold is considered a hedge against inflation and economic risks, higher interest rates raise the opportunity cost of holding the non-yielding asset.
A couple of US central bankers said on Friday they supported further sharp rate hikes, even as investors cheered data showing inflation expectations to be less worrisome than initially feared.
“The (Russian import ban) headline will be quickly digested, and the market should go back to its tug of war between higher front-end rates, negative for gold, and recession odds meaning sooner rate cuts, positive for gold,” said Stephen Innes, managing partner, SPI Asset Management.
Spot silver jumped 1.7% to $21.46 per ounce, platinum rose 0.6% to $912.70 and palladium gained 2.7% to $1,926.21 per ounce.
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