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

 (Updates prices)
    * Gold's gains capped by expectations of Fed rate hikes 
    * Two-year U.S. Treasury yields hit highest since early 2019

    By Eileen Soreng
    April 4 (Reuters) - 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        was up 0.3% at $1,930.02 per ounce by 1130
GMT, while U.S. gold futures        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
    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        was buoyed as U.S. two-year Treasury
yields climbed to their highest since early 2019.             
    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        was 0.3% higher at $24.66 per
ounce, platinum        rose 0.3% to $988.55, and palladium
       climbed 2.4% to $2,331.07.

 (Reporting by Eileen Soreng in Bengaluru; Editing by Subhranshu
Sahu and Jan Harvey)