El Salvador lawmakers overturn mining ban Bukele called absurd
El Salvador became the first country in the world to ban all forms of metals mining in 2017.
Gold prices climbed higher on Monday as Western nations escalated sanctions on Russia for the invasion of Ukraine, heightening fears of a hit to global economic growth.
Spot gold rose 0.6% to $1,901.64 per ounce by 11:20 a.m. ET, maintaining close distance to a 15-month high it reached last week. US gold futures were up 0.9% at $1,905.70 per ounce in New York.
[Click here for an interactive chart of gold prices]
Earlier, bullion surged as much as 2.2% after penalties were placed on the Bank of Russia to prevent it from using foreign reserves to blunt sanctions. Some Russian lenders were also excluded from the SWIFT messaging system that underpins trillions of dollars worth of transactions.
In response to these sanctions, the Russian central bank raised its key interest rate to the highest in almost two decades and imposed some controls on the flow of capital in a bid to shield the economy as its currency plummeted.
Concerns are now growing about whether the financial chaos may damage global economic growth or require action by the US Federal Reserve to supply dollars.
Meanwhile, Russia’s central bank said on Sunday it would resume its gold purchases on the domestic market after a two-year pause. It holds over 2,000 tonnes in bullion already, making it the fifth-biggest sovereign owner.
“The purpose of buying gold (in the domestic market), is to monetize it when required,” Nicky Shiels, head of metals strategy at MKS PAMP SA, wrote in a Bloomberg note. “It’s the fear over potential central bank sales that may overhang the market.”
Gold is now on course for its best month since May amid the fraught geopolitical tensions, having outperformed other haven assets. It will also be getting a boost from lower expectations of aggressive monetary tightening by the Fed to tame the highest inflation in decades.
(With files from Bloomberg)
