It appeared as though tensions in Ukraine were on the decline last week, when Russian President Vladimir Putin said military action would only be used as a last resort, but major global markets are still being impacted by the international situation.
Investors who trade gold should be keeping a close eye on Ukraine, as prices increased early this week, with worries over war tensions.
“Market players remain cautious,” Guillaume Dumans, co-head of research firm 2Bremans told Reuters. “There’s a lack of enthusiasm in chasing stocks, and some are just thinking about moving to the sidelines after the roller-coaster ride we’ve had since the start of the year.”
One of the biggest concerns is that Ukraine’s acting president announced the formation of a volunteer national guard. Meanwhile, the ousted leader continues to insist that he is the country’s true president. Russia has yet to acknowledge the current administration in Ukraine, which has many worried that the situation could end with military action.
Ukraine also began military drills with residents of Crimea expected to vote on whether or not they want to join Russia in a March 16 referendum.
“The Ukraine situation situation is lending support to gold,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, told Bloomberg. “The fear premium is back because of the developments.”
Gold has already increased 12 percent this year, following the biggest decline since 1981 in 2013. Until the situation in Ukraine is resolved, gold may continue to rise, so this is something investors should keep a close eye on moving forward.
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