Ukraine crisis could affect gold price

Ongoing tensions between Russia and Ukraine have been seen to be impacting on the price of gold.

The precious metal closed at a nine-day high on Thursday (August 7th) following its largest one-day gain since June 19th on the Comex. It currently stands at 1319.47, a 0.60 per cent increase, as of 09:06 BST on Friday (August 8th). However, traders on the Comex are noting a sense of concern over escalating tensions in Ukraine which are reducing gold's "safe-haven appeal".

Russia announced a retaliation to Western sanctions on Thursday by banning the import of agricultural goods from the countries which have imposed the sanctions, including Europe and the US. NATO also revealed that Russia has amassed 20,000 soldiers on Ukraine's border, sparking fear of a potential invasion of the nation's eastern territory where heavy fighting has taken place in recent weeks.

InVezz reports that this growing tension is beginning to impact on the price of gold across the world. The New York Mercantile Exchange (NYMEX) showed December gold futures to be down $3.5 (£2.08) a troy ounce to $1,304.7 as of 10:49 BST on Thursday. This had been preceded by a jump of $22.7 on Wednesday.

UBS AG analysts wrote in a note on Thursday, published by the news provider: "At the margin, gold's performance yesterday was somewhat impressive considering how the dollar hovered around the highs, with the DXY index touching this year's high of 81.72 intraday.

"That gold prices had managed to hold at the 200-day moving average, despite a couple of attempts to break the downside, could well have lured short-term players back in."

Lv Jie, an analyst at Cinda Futures Co., did provide some positivity for gold in wake of the Ukraine crisis telling Bloomberg that the precious metal has "received support as geopolitics return to headlines".

Find out about commodities trading and learn CFD strategies at City Index