The price of gold has been exhibiting high volatility the past few days, spurred by the Ukrainian crisis rollercoaster. Mounting geopolitical tensions also send inflation rates up, as the value of certain commodities, and especially of energy-related assets, increases. The price of gold benefits from rising inflation, since the metal is often used as an inflation hedge.
On Monday morning, hopes of a peaceful resolution to the crisis in Ukraine were revived, amidst reports of a possible peace summit between Russia and the US, brokered by French President Emmanuel Macron. Risk appetite grew following the announcement of a possible meeting between the Russian and US presidents, dampening the appeal of gold and pushing the price of gold down.
Hopes for a diplomatic resolution to the issue were diminished later on Monday though, as Vladimir Putin signed a decree recognizing the independence of the two separatist regions Donetsk and Luhansk in eastern Ukraine. Immediately afterward, he ordered Russian troops in these regions, in a ‘peacekeeping’ mission as he declared, effectively invading Ukraine. The EU, the UK, and the US have condemned the Russian President’s actions and are prepared to enforce economic sanctions on Russia. Mounting geopolitical tensions support the price of gold, as risk appetite diminishes and demand for safer assets grows.
The gold price was catapulted to $1,914 per ounce on Monday, following Putin’s announcement and on Tuesday gold traded sideways, around the $1,901 per ounce level. If the price of gold continues to rise, it may find resistance near its June 2021 high at $1,917 per ounce, while if it decreases, support may be found at 1,782 per ounce.
US treasury yields fell during the past couple of days, as demand for safe assets increased. Treasury yields compete directly with gold as an investment, as gold does not pay dividends or interest.
This week, the Russia - Ukraine crisis is expected to strongly influence the gold price. Economic and inflation indicators scheduled to be released in the US, and especially the US PCE inflation indicators, may also affect the price of gold, as the Fed’s much-anticipated meeting in March is drawing near.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Fill in the registration
form and click
Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.
When your live account is approved, you can deposit funds and start trading on your chosen platform!
The website you are now viewing is operated by TopFX, a trade name of Fondex Limited, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.
If you wish to proceed, please confirm that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX or any other entity within the Group.
These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.