Gold price closing in on $1,900 as tensions escalate in Ukraine

Yaroslav the Wise Monument in Kiev. Credit: Wikimedia Commons

Gold prices jumped to an eight-month high on Thursday, closing in on the key $1,900 /oz mark, after reports of mortar fire in eastern Ukraine drove investors toward safe haven assets.

Spot gold rose 1.4% to $1,895.84/oz by noon ET, its highest since early June 2021. US gold futures were also up 1.4%, trading at $1,899.00/oz in New York.

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Russian-backed rebels and Ukrainian forces traded accusations on Thursday that each had fired across the ceasefire line in eastern Ukraine. The escalating tensions reinforced gold’s investment appeal while dampening appetite for riskier assets.

“When times really get uncertain and anxiety is running high, gold is still the safe-haven asset to go to,” Jim Wyckoff, a senior analyst at Kitco Metals, said in a Reuters report.

Meanwhile, the RIA news agency reported Russia has expelled deputy US ambassador Bartle Gorman and Washington will respond to the move.

“Not only do the events on the Ukrainian border have investors seeking out safe-havens, but it (gold) also offers inflation protection at a time of surging prices and the prospect of higher oil and gas prices, if Russia does invade,” Craig Erlam, senior market analyst at OANDA, said in a note.

On Wednesday, minutes from the Federal Reserve’s January meeting revealed US policymakers’ intention to begin raising interest rates to curb inflation, which would translate into higher opportunity cost of holding bullion.

(With files from Reuters)