hile off its highs, overnight gold prices pushed above $2,000 an ounce, hitting their highest level since September 2020. The rally in the precious metal came as oil prices jumped 10%, rising to $130 a barrel, its highest level in 14 years.
According to many analysts, oil prices jumped as the U.S. said that it was considering placing sanctions on Russian oil exports due to its incursion into Ukraine. The ongoing conflict in Eastern Europe is also generating safe-haven demand for gold. However, analysts have said that gold is also seeing new momentum on rising commodity prices pushing inflation higher.
Daniel Pavilonis, senior commodities broker with RJO Futures, said that gold is once again recognized as an essential store of value. The market, he said, is much bigger than a safe-haven asset to protect against geopolitical risks.
He added that even if tensions between Russia and the Western world started to ease, gold remains well supported through the long-term.
"The story for gold has now become a global one," he said. "It's not just oil, but all commodity prices are going higher, and that is going to create major inflation, and investors are turning to gold to protect their capital. With inflation, once the cat is out of the bag, it is very difficult to get it back in without raising rates so high that it causes long-term economic damage."
According to many analysts, oil prices jumped as the U.S. said that it was considering placing sanctions on Russian oil exports due to its incursion into Ukraine. The ongoing conflict in Eastern Europe is also generating safe-haven demand for gold. However, analysts have said that gold is also seeing new momentum on rising commodity prices pushing inflation higher.
Daniel Pavilonis, senior commodities broker with RJO Futures, said that gold is once again recognized as an essential store of value. The market, he said, is much bigger than a safe-haven asset to protect against geopolitical risks.
He added that even if tensions between Russia and the Western world started to ease, gold remains well supported through the long-term.
"The story for gold has now become a global one," he said. "It's not just oil, but all commodity prices are going higher, and that is going to create major inflation, and investors are turning to gold to protect their capital. With inflation, once the cat is out of the bag, it is very difficult to get it back in without raising rates so high that it causes long-term economic damage."
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