Gold prices rise by $19 as the Ukrainian crisis escalates

Gold prices rise by $19 as the Ukrainian crisis escalates

Gold prices rose more than 19 dollars, during trading on Monday, recording their highest levels since mid-March; The uncertainty surrounding the Russian-Ukrainian conflict dampened risk sentiment and pushed investors towards bullion safety.

This comes with the escalation of tensions in the Ukraine crisis; Several explosions were reported to the authorities in western and southern Ukraine on Monday; After nearly two months of bloody fighting, Russian forces declared almost complete control of the strategic southern port city of Mariupol.

Gold Prices Today

The price of gold futures contracts – for June delivery – increased by 0.95%, equivalent to $ 18.76 , to reach the level of $ 1993.02 an ounce.

Gold prices ended their trading last week, up by 1.5%.

And the price of spot delivery of the yellow metal rose by 0.64%, to reach $1990.90 an ounce.

At the same time, the price of silver futures contracts – May delivery – rose by 1.59%, at $26.08 an ounce.

While the spot platinum price rose by 1.96% at $1,013.33 an ounce, in contrast, the spot palladium price rose 1.47% at $2387.37 an ounce.

Ukraine Crisis

“There appears to be a little bit of risk aversion in the market, with some exaggeration in the Russian-Ukrainian position,” said Ilya Spivak, currency strategist at DailyForex, while warning that poor liquidity could exaggerate price action.

The Ukrainian authorities said that rockets landed in Lviv, in the early hours of Monday morning, and explosions rocked other cities, while Russian forces continued to bombard them after declaring their almost complete control of the strategic southern port of Mariupol.

Gold Market Forecast

Experts see bullion as a safe store of value in times of political and economic crisis, and another $2000 an ounce test is likely to be the path of least resistance for gold; $2,100 is the largest and most effective number to watch.

“There are some meaningful peaks that need to be overcome to make the case for lasting gains,” Spivack says.

US Bonds

Despite the rise in gold prices, today, Monday; It met resistance and did not extend the gains as yields on the benchmark 10-year US Treasury bond rose to their highest levels since December 2018.

Spot gold may rise to a range of $98 to $2012; It broke through the resistance level at $1,489 an ounce, according to Technical Analyst Wang Tao.

Analysts believe that the continuation of the war between Russia and Ukraine with no signs of a ceasefire has fueled fears, which increases the demand for the precious metal, which is considered a safe haven against the risks of geopolitical tensions.

China’s economy slowed in March; Where consumption, real estate and exports have been hit hard; This led to a faster-than-expected first-quarter growth figure, due to coronavirus restrictions and the Ukraine war.

Interest Rates

Although gold is a hedge against inflation and geopolitical risks; Raising interest rates would raise the opportunity cost of holding non-yielding bullion.

“Inflation came in at 8.5% y/y in March, the highest level in 40 years, with inflation supporting the yellow metal,” said Airgoed Director of Advisory Michael Langford.

“However, gold has no return that can be returned, and in a higher interest rate environment, it would be less desirable for other asset classes,” he added.

Expect gold to enjoy some minimal upside, but the price is likely to fall in the medium to long term.