Gold up as call for stronger sanctions on Russia blunts risk appetite

Gold edged higher on Monday as the prospect of further sanctions on Russia over its invasion of Ukraine knocked stock markets and blunted appetite for risk, though elevated U.S. Treasury yields and a stronger dollar limited gains. Spot gold XAU= was up 0.3% at $1,930.02 per ounce by 1130 GMT, while U.S. gold futures GCv1 rose 0.5% to $1,933.80.

"We haven't seen any progress in the peace talks and negotiations between Russia and Ukraine, so we have seen a modest return of the risk-off scenario, which is lifting gold prices," said Carlo Alberto De Casa, an external market analyst at Kinesis.

Global outrage spread on Monday at civilian killings in north Ukraine, as fighting raged on in the country's south and east. Germany said the West would agree to impose more sanctions on Moscow, causing share markets to turn cautious.

Further gains in bullion were however capped as Friday's solid jobs report for March cemented expectations of bigger interest rate hikes by the U.S. Federal Reserve. The dollar index =USD was buoyed as U.S. two-year Treasury yields climbed to their highest since early 2019. USD/ US/

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. Investors are looking for signs of any discussion of a 50 basis point rate hike when the Fed releases minutes from its March meeting on Wednesday.

"Hawkish Fed pricing and rhetoric to damp inflation, though a cap on gold cheer to a degree, can support the narrative for a 'slower growth risk' bullion bid for the time being," Citi Research said in a note.

Elsewhere, spot silver XAG= was 0.3% higher at $24.66 per ounce, platinum XPT= rose 0.3% to $988.55, and palladium XPD= climbed 2.4% to $2,331.07.