Title: Gold Down on a Rise in Treasury Yields After U.S. and European Sanctions on Russia

Feb 22, 2022 10:44PM ET

By: AnalysisWatch

Gold fell in Asia on Wednesday morning as sovereign bond yields rose in the wake of U.S. and European sanctions on Russia, offsetting safe-haven demand.

By 05:38 ET, gold futures contracts had fallen 0.30 percent to $1,901.65.The dollar, which usually moves inversely to gold, moved higher on Wednesday morning.

U.S. President Joe Biden took action on Tuesday targeting Russian elites and the sale of sovereign debt after Russian President Vladimir Putin ordered troops into two separatist regions in eastern Ukraine.

The sanctions are meant to punish the Russian economy but are not intended to hit energy markets, a senior U.S. State Department official said. Germany, meanwhile, has suspended a major gas pipeline project from Russia.

U.S. Treasury bonds have risen as a result of the sanctions.

Investors now expect the Federal Reserve to raise interest rates because of higher raw material costs due to Russian-Ukrainian tensions.

St. Louis Federal Reserve President James Bullard is taking a hawkish stance and is pushing for a 100 basis point rate hike over the next three meetings.

In the Asia-Pacific region, the Reserve Bank of New Zealand raised its interest rates for the third straight meeting and said it planned a higher-than-expected rate to tame inflation.

Among other precious metals, silver rose 0.2%, while platinum remained at $1,075.75 and palladium rose 0.3%.