Western economic sanctions continue to wreak havoc on Russia's economy. The country cannot use its huge gold reserves.
On Thursday, the US Treasury Department issued a notice clarifying that gold transactions in Russia are prohibited, citing decrees signed by President Joe Biden.
The Treasury Department said in a statement that US citizens are prohibited from engaging in any gold-related transactions with Russia.
Prior to this notice, Russia had been using its gold reserves to circumvent international sanctions.
According to some analysts, the updated directive would make it difficult for Russia to use its gold reserves to support the economy. However, it does not make it impossible.
Russia currently holds 2,298.5 tonnes of gold in its reserves. Ranking fifth in the world in terms of storage, it is estimated to be worth around 140 billion dollars.
According to Colin Cieszynski, chief market strategist at SIA Wealth Management, Russia has allies in the East who can buy its gold. All the economic sanctions imposed on Russia raise questions about the future of the Western financial system and the status of the US dollar as a reserve currency.
Meanwhile, gold prices are firmly behind the $1,900 mark:
Cieszynski also said that sanctions against Russia could encourage other countries to reduce their dependence on the US dollar, with gold being the most attractive alternative.
In addition, the geopolitical situation in Ukraine creates an uncertain environment for the global economy, stimulating demand for the precious metal as a safe haven.