Gold price outlook after LBMA suspended Russian gold

Gold price is back up above the crucial level of $2,000 after dropping below it on Monday. The precious metal got into the new week on the front foot, rising above this psychological level for the first time since August 2020 at $2,003.53. It has since rose past that level; surging to Tuesday’s intraday high of $2,021.39. At the time of writing, it was at $2,008.28.

Russian gold ban

Russia is a major gold producer in the world. Indeed, it has some of the world’s key miners including Polyus PJSC and Polymetal International Plc. Interestingly, most of the Russian gold exports are handled by the nation’s commercial banks. With a large number of them being subject to sanctions by the US and Europe, the situation has heightened concerns over the supply of physical gold.

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At the same time, London has suspended Russian gold refineries as the West intensify sanctions against the east European country. London is one of the the crucial bullion centers in the world. As such, the decision by the London Bullion Market Association (LBMA) to suspend all of the 6 Russian silver and gold refineries from its accredited Good Delivery List has raised the bullion’s supply concerns.

Safe haven demand

Gold price began the week on a high note after President Putin’s remarks on Sunday that the ongoing war will only end if Ukraine meets his demand. Since then, it has recorded some price swings as investors weigh the ongoing crisis.

Notably, the third round of talks held in Belarus in Monday failed to reach a major breakthrough. An escalation of the war in eastern Europe will likely continue to boost the safe haven appeal for gold and other precious metals.

At the same time, a strong US dollar and rebound in US bond yields may curb gold price’s gains in the short term. At the time of writing, the benchmark 10-year Treasury yields were at 1.84%, having bounced back from the two-month low of 1.66% hit on Monday. The bounce back has sustained the dollar index above $99.00. In the previous session, it rose to $99.42, a level last recorded in May 2020.

Investors are now keen on the US CPI figures scheduled for release on Thursday and JOLTs job openings on Wednesday. The economic data will impact the value of the dollar and gold price by extension.