Gold buoyed by mounting geopolitical tensions

Safe-haven assets are on the rise, amidst mounting fears of a Russian attack against Ukraine. An escalation of the Russia-Ukraine crisis might boost the price of gold, as the metal is considered a safe-haven asset and its price rises in times of war. 

Gold prices spiked upwards last week, as there were indications that an escalation of the Russia-Ukraine crisis might be imminent. On Monday, Kiev sought an urgent meeting with Moscow, to discuss Russia’s buildup of military assets close to Ukraine’s borders. Even as diplomatic negotiations continue, Russia is preparing to hold military exercises near its border with Ukraine. Diplomatic efforts so far have met with little success and there are fears that the situation might escalate even within the week. NATO chief Jens Stoltenberg stated that there is a real risk of a new armed conflict in Eastern Europe and that the alliance would consider maintaining a longer-term presence in Eastern Europe in the coming months. U.S. Secretary of State Anthony Blinken warned that Russia could launch an attack against Ukraine at any time, even during the winter Olympics, and warned US citizens to leave Ukraine. Similarly, the British Foreign Office has advised British citizens in Ukraine to leave the country, while there are still commercial means available. 

Geopolitical tensions 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. 

Gold price climbed above $1,874 per ounce on Monday, buoyed by mounting geopolitical tensions. If the price of gold continues rising, it may find further resistance at $1,877 per ounce, while if it decreases, support may be found at 1,782 per ounce.

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Written by:
Myrsini Giannouli

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