(Bloomberg) -- Gold rallied more than 2% after Western nations ramped up sanctions on Russia in response to its assault on Ukraine, spurring demand for the haven asset.
A decision to penalize Russia’s central bank and exclude some Russian banks from the SWIFT messaging system, used for trillions of dollars worth of transactions around the world, was announced Saturday in a joint statement by the U.S., European Commission, France, Germany, Italy, U.K. and Canada.
The agreement also includes measures to prevent Russia’s central bank from deploying its international reserves to undermine sanctions. The Bank of Russia said it will start buying gold again, nearly two years after it ended a long run of purchases.
Bullion is heading for the biggest monthly gain since May as the latest developments in Ukraine cast a pall over markets. Apart from its haven asset role, gold is also a hedge against inflation, which could be stoked further by the surging prices of wheat, energy and metals.
Spot gold rose as much 2.2% to $1,930.85 an ounce, before trading at $1,920.86 at 7:10 a.m. Singapore time. Palladium climbed as much as 7.8% on concerns over potential supply disruptions. Russia produces about 40% of the palladium mined globally. Silver and platinum rose more than 1%.
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