Gold and oil prices both increased on February 22 after Russian President Vladimir Putin declared the independence of the two self-proclaimed eastern union states of Donetsk and Lugansk, and planned to send peacekeeping forces to the region amid the serious escalation of the conflict.
Gold prices are approaching a 9-month high. According to Reuters, spot gold increased 0.2% to 1,909.33 USD/ounce at 7:53 GMT on February 22, nearly the highest level since June of 1,9133.89 USD/ounce before. US gold futures rose 0.7% to $1,913.80.
"With the deteriorating situation in Eastern Europe, there is little reason for gold to fall at this time," said Jeffrey Halley, senior market analyst at OANDA. Increasing inflationary pressures around the world are also causing gold prices to increase, especially as the situation becomes more serious due to major Western sanctions against Russia".
According to Reuters technical analyst Wang Tao, spot gold could break the resistance level of 1,920 USD/ounce, and could head towards 1,940 USD.
Meanwhile, WTI oil prices have increased by more than 3% compared to the trading session on February 18 (closed on February 21 due to the US holiday), up over $93/barrel.
Geopolitical tensions in Eastern Europe and the Middle East have rocked the market and pushed oil prices to nearly $100/barrel. A conflict in Ukraine or retaliatory sanctions could increase the flow of goods including oil, gas, aluminum and wheat. Increased demand and falling global crude and oil reserve stocks have contributed to the increase, while hopes for additional supply from Iran remained uncertain as nuclear negotiations continued.
Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte, said: Oil will trade above $130 if tanks run across the Ukrainian border. That will not be good for stocks but very good for gold.
While gold has benefited from its role as a haven during times of geopolitical uncertainty, cryptocurrencies have fallen.
Bitcoin fell to its lowest level in more than two weeks, falling for the sixth consecutive day, hitting a low of 36,372 USD on February 22. Other cryptocurrencies also fell, with Ether falling as much as 2.9% and XRP falling as 6.7%.
Bitcoin fell below $40,000 over the weekend and continued to weaken as the Ukraine crisis deepened, weakening the case that cryptocurrency is a paradise in times of geopolitical uncertainty.
John Roque of 22V Research predicts that Bitcoin could fall below 30,000 USD - an unprecedented level since July - as traders increasingly favor gold, potentially pushing gold bars to an all-time high.
The Chicago wheat contract reached its highest level in nearly a month when trading resumed on February 22. Russia and Ukraine account for 1/4 of global grain trade and 1/5 of corn sales. There are concerns that the escalation could disrupt shipments in the Black Sea at a time when world food prices have been high for a decade.
