Geopolitical concerns over the future of Ukraine have continued to affect the price of gold this week, with the precious metal's value taking a sharp dive yesterday (Mary 7th).
Gold prices fell by one per cent on Wednesday as tensions between Ukraine and Russia continued to fester, leading investors to worry about the future of the region.
Thomas Capalbo, precious metals trader at brokerage Newedge, told Reuters that political issues in eastern Europe are continuing to have a knock-on impact on the value of gold and this helps to explain the one per cent fall in prices yesterday.
Gold was also affected by comments made by the new chair of the Federal Reserve Janet Yellen, who stated that a high degree of monetary accommodation is still warranted because of the "considerable" slack in the labour market in the US, as well as the continued low rate of inflation.
This led to an upturn in the value of the dollar compared to global rival currencies and in turn, the price of gold was hurt as a result of the comments by Ms Yellen.
Mr Capalbo stated that as well as questions over the future of Ukraine, investors are also worried about "whether the Fed will increase interest rates or leave them here, so all of these uncertainties are weighing down on gold".
Tarek El-Mdaka, chief executive of Kaloti Precious Metals, told Reuters recently that he believes the gold market is "shifting east", with Dubai in particular becoming increasingly important for the precious metal.
He pointed out that a $60 million (£35.4 million) refinery is being built by Kaloti Precious Metals in Dubai and this makes up part of a plan produced by the Dubai Gold and Commodities Exchange to introduce a spot gold contract this June. Mr El-Mdaka said: "The refinery is part of the next stage, making Dubai a top centre for physical gold refining and clearing."
Tension between Ukraine and Russia is still high, despite Russian leader Vladimir Putin stating that he is pulling troops back from Ukrainian border. However, the White House claimed this is not the case and said there is no evidence such military action has taken place.
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