Safe-haven assets were boosted over the past weeks, over fears of a Russian attack against Ukraine. On Monday, Kiev sought an urgent meeting with Moscow, to discuss Russia’s buildup of military assets close to Ukraine’s borders. U.S. Secretary of State Anthony Blinken warned that Russia could launch an attack against Ukraine even within the week, and warned US citizens to leave Ukraine. Similarly, the British Foreign Office has advised British citizens in Ukraine to leave the country, while there were still commercial means available.
On Tuesday however, the Russian Defense Minister stated that some troops had returned to their base after completing drills near the Ukrainian border. The move raised hopes of de-escalation of the crisis, and the price of gold plummeted.
Gold price peaked above $1,879 per ounce early on Tuesday, its highest level since November. The price of gold retreated heavily though, after the announcement that Russian troops would withdraw from the Ukrainian border, falling as low as $1,844 per ounce and is currently testing the $1,853 per ounce resistance. If the price of gold rises again, it may find further resistance at $1,877 per ounce, while if it decreases, support may be found at 1,782 per ounce.
If geopolitical tensions rise again, they might also drive the price of other commodities up, especially energy-related assets, further increasing inflation. The increase in oil price in recent months has also been driving inflation up, benefitting gold prices. Geopolitical tensions in the region might also serve to drive the price of other commodities up, especially energy-related assets, contributing to rising inflation rates.
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