Russia-Ukraine Geopolitical Uncertainties: Can Gold Rates Surge To All-Time High?

Gold prices in the Indian markets are surging, in line with the international trend. The Russia-Ukraine war in February has been impacting the global assets markets directly. Expecting further uncertainty in the political and economic situation, the yellow metal is acting as a safe haven. Now, in the global markets, spot gold prices are being quoted at $1911.10/oz (till 10.47 am IST, February, 28).

In the past 1 week, gold markets have rallied consistently. Before the war, the gold rates were under pressure and investors were expecting a further fall, with the expectations of an interest rate hike by the US Federal Reserve. However, the Russia-Ukraine war has suddenly changed the situation and some analysts are anticipating that if this trend continues, gold rates can reach to $2000/oz level soon, the all-time high range, which has been experienced in 2020.

The Russia-Ukraine geopolitical tensions intensified as Russian President Vladimir Putin had ordered a high alert for nuclear forces. Russia started sea, land, and airstrikes in Ukraine this month. The Ukrainian President wanted to have a close deal with the European Union and NATO, which Putin did not take very well. Russia thinks Ukraine's liaison with the West can restrict their control and access over the eastern European region and the Black sea. Hence, Russia started invading Ukraine to ensure its political and military control over the state. Earlier in 2014, these two countries got engaged in a war over the same issue and the diplomatic relations between them weakened.

Due to the present situation, investors and traders are worried about a further rise in the gold market. Additionally, the rising inflation rate in the USA is a concerning matter. In March, if the US Fed hikes the interest rate to control inflation, gold rates can ease a bit globally. Gold rates and the US Dollar index are generally related adversely in the markets, however, the situation has changed now. Both of these two are on the verge of gaining at present.

On February 28, the Indian gold rates have gained by Rs. 660/10 grams and Rs. 720/10 grams respectively for 22 carat and 24 carat gold. Today, the 22 carat gold prices are quoted at Rs. 47,000/10 grams, and the 24 carat gold rates are quoted at Rs. 51,280/10 grams. In Chennai, 22 carat gold rates have gained by Rs. 760/10 grams today.

The Comex gold futures surged by 0.83% and were quoted at $1925.10/oz, till last traded. On the earlier day, Comex gold futures closed at $1909.20/oz. The spot gold prices were quoted at $1911.50/oz, gaining by 1.14%, till last traded. On the other hand, the US dollar index in the spot market stood at 97.37, gaining by 0.23%. In India, the MCX gold in April future quoted at Rs. 50,897/10 grams, gaining by 1.68%, till last traded.