Gold today costs the most in two months - about $1840 per ounce. The price increases seem to be justified by: concerns about inflation, lower yields of American bonds and increased demand for safe assets after a possible correction on Wall Street.
As recently as December, an ounce of gold cost about $1,760. However, inflation seems to be dragging gold prices upwards. Annual readings of the price dynamics in the world's major economies reached the highest levels in decades. Suffice it to say that the U.S. consumer price index rose at a rate of 7 percent in December, the largest in nearly 40 years.
Gold was also able to gain when the yield on the 10-year U.S. Treasury bond fell below 1.8 percent on Friday, down from the 2-year peak of 1.9 percent reached early last week.
Geopolitical tensions have increased gold's appeal as a safe haven. The Americans and British have already ordered the evacuation of personnel from Kiev amid fears of a Russian invasion of Ukraine.
The specter of conflict is a demand for oil
Crude oil is also getting more expensive. WTI futures rose above $85 today after briefly falling below $83 last week. Here, geopolitical tensions may have increased concerns about supply disruptions.
US President Joe Biden is said to be considering sending several thousand troops to NATO allies in Eastern Europe and the Baltics. A senior British minister also said Russia would face tough economic sanctions if it wanted to take power in Ukraine.
In a completely different part of the world, the defense ministry of the United Arab Emirates conveyed today that it had destroyed two Houthi ballistic missiles aimed at the Persian Gulf country.
The combination of so many uncertainties and risks, along with increasingly lax restrictions and shortened quarantine periods around the world for coronavirus, could boost demand for oil.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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