Investors who trade gold may want to keep an eye on the situation in Ukraine, as it is having an impact on the commodity. With tensions high in the Crimean peninsula, gold futures increased to a 17-week high, as investors sought a haven from other markets that could be negatively impacted by military action.
However, with Russian President Vladimir Putin’s recent comments saying that there is no immediate need to send troops to Ukraine, gold futures declined, as demand for the haven the commodity provides decreased, according to Bloomberg.
“The situation seems to have calmed down a bit, and that’s pushing gold lower,” Phil Streible, senior commodity broker at R.J. O’Brien & Associates in Chicago, told Bloomberg. “People will continue to monitor data out of the U.S. to gauge strength of the economy.”
Gold is coming off a poor year in 2013, as the price dropped 28 percent, which is the most since 1981. The cause of this steep decline was the record growth seen by U.S. equities. With that said, gold traders should be keeping a close eye on both Ukraine and the equities market moving forward.
Global stocks rebound as tensions ease
Gold wasn’t the only market impacted by Ukraine, as global stocks increased with fears of military action easing. According to CNN Money, markets across the world rebounded after Putin’s announcement. For example, Russia’s main stock index – the Micex – increased 6 percent following an 11 percent drop in the previous day and the Dax in Germany edged up 2 percent after a 3.4 percent decline.
“There has been a distinct change in the tone of the markets today as the Russian-Ukraine crisis stabilizes,” Kathleen Brooks, research director at FOREX.com, told CNN Money. “The latest headlines suggest that Putin has had a change of heart. Putin is still trying to save some face after this situation dramatically back-fired on him.”
One of the biggest reasons markets have been impacted is because the U.S. suspended trade and investment talks with Russia, which is just the first of many possible moves that could be made to keep Putin out of Ukraine. Investors need to keep a close eye on the tensions in Ukraine, as further action taken by the U.S. and other nations could impact stocks, gold and other commodities.
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