The gold market continues to benefit from the safe-haven appeal as Russia-Ukraine tensions confuse and create fear in the market. Analysts’ views on the impact of the Ukrainian tension and market developments on gold prices. cryptocoin.com compiled for our readers.
Volodymyr Zelenskiy declared February 16 ‘Unity Day’
There has been much confusion over Ukrainian President Volodymyr Zelenskiy’s cynical comments about February 16 being the day Russia plans to attack Ukraine. In a video message released Monday, Zelenskiy declared this Wednesday “Unity Day”, rather than what many in the Western media have described as the start of a possible Russian invasion:
They tell us that February 16 will be the day of the attack. Today we will make unity day. They are trying to scare us by giving a new date for the start of the military operation. On that day, we will hang our national flags, wear yellow and blue flags and show our unity to the whole world.
The February 16 reference created fear in the markets Monday afternoon. To clarify the comment, Zelenskiy spokesman Sergii Nykyforov said the comment was distorted. “The president referred to a history that was spread by the media,” Nykyforov told NBC News.
In a video message on Monday, the Ukrainian leader also urged politicians and business leaders who had fled the country to return within 24 hours in a show of unity. Zelensky said, “In such a situation, it is your direct duty to be with us, the Ukrainian people. “I suggest you return to your homeland within 24 hours and stand shoulder to shoulder with the Ukrainian army, our diplomacy and our people,” he said.
Daniel Briesemann: Gold price likely to climb further
On Monday, the United States announced it was closing its embassy in the country’s capital, Kiev, and “temporarily relocating” its operations to Lviv, a city in western Ukraine close to the Polish border. By contrast, gold prices tested the $1,870 level as US stock indices fell.
According to analysts, the Russia-Ukraine conflict will drive gold prices this week and the market is looking to gain more in case of further escalation. Commerzbank analyst Daniel Briesemann comments:
The increase can be attributed to a warning by US intelligence services that a Russian invasion of Ukraine is imminent. As a result, gold has enjoyed significant demand as a safe haven. This need for investor safety was evident in ETFs as well. Bloomberg reported that Friday saw nearly 6 tons of entries. If the situation really escalates there, the gold price is likely to climb further at the outset.
“The bullish momentum could push the gold price to the $1,900 level”
OANDA senior market analyst Edward Moya says geopolitical tensions could push the gold market up to $1,900. “The $1,880 level will be the key resistance for gold,” the analyst said. The bullish momentum could push prices to the $1,900 level.”
Fears of a possible invasion of Ukraine by Russia have rekindled after the US said on Friday that Russia could launch military action in Ukraine “every day”. Russia repeatedly denies reports that it is planning to attack Ukraine.
Over the weekend, Kremlin spokesman Dmitry Peskov accused the West of ‘hysteria’. “This hysteria is deliberately incited,” Peskov said on Sunday. We are accused of some kind of unusual military activity in our region by those who brought their troops from across the ocean. “This is neither entirely reasonable nor entirely polite.”
The agenda for the week will be the minutes of the January FOMC meeting.
On Monday, St. Louis Federal Reserve Chairman James Bullard created another atmosphere of uncertainty and in a hawkish comment said he would support a rapid rate hike timeline that forecasts a 100 basis point increase by July 1. “It was really October, November, December, January that questioned any idea that inflation would naturally moderate without the Fed acting in any reasonable time frame,” Bullard said.
The biggest item on the agenda this week will be the January FOMC meeting minutes. Markets will look for clues about how aggressive the US central bank might be. “The minutes will help clarify whether officials will consider a 50 basis point increase,” said Paul Ashworth, North America chief economist at Capital Economics.
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