Gold Price Crosses $2,630, MCX Rate Spikes To Rs 75,700 As Russia-Ukraine Tension Escalates
A sharp climb in gold price was also seen on MCX, where the metal's futures rose by more than Rs 600 after reports of Ukraine's use of ATACMS missiles against Russia emerged.
Gold prices rose globally on Tuesday as the commodity markets turned jittery over Ukraine reportedly using western-made long-range missiles against Russia.
The Ukrainian forces used the US-made Army Tactical Missile System or ATACMS missiles to strike Russia near a border region, Bloomberg reported RBC Ukraine, a local news agency, as saying. The report came shortly after Russia warned of a possible "nuclear response" to Ukraine's use of advanced western missiles against it.
The developments pushed gold prices across the $2,630 an ounce in the global market. Spot gold was trading 0.81% higher at $2,632.9 per ounce at 10:00 a.m. GMT shortly after Moscow announced a revision in its nuclear doctrine.
The US gold futures also rose by 0.75%, as they traded at $2,633.8 an ounce on the Comex.
A sharp climb in gold rates was also seen on India's Multi Commodity Exchange, where the metal's futures rose by more than Rs 600 per 10 grammes after reports of Ukraine's use of ATACMS missiles against Russia emerged. At 3:50 p.m., the December contracts on the MCX were trading 0.9% higher at Rs 75,721 per 10 grammes.
The escalation of the Russia-Ukraine conflict can lead to a rebound in gold prices, which have slid sharply following the US presidential election. Donald Trump's win in the high-stake polls led to the firming up of US dollar and bond yields, which in-turn reduces the appeal of non-yielding assets like bullion.
According to analysts, although the dollar will determine the movement of gold in the short term, the metal will remain strong in the medium-term owing to the major global conflicts.
"What is happening in the Middle East will continue to impact the price of gold. The tensions between Israel and Iran are at another orbit now as compared to months ago. And Russia and Ukraine tensions are also escalating. In this backdrop, gold will remain in demand," according to Kranthi Bathini, director at WealthMills Securities Pvt.
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Gold, as a safe-haven asset, is bound to gain if tensions rise further between Russia and the West, analysts said. On the other hand, stocks are likely to be adversely impacted in the US and European markets, they pointed out.
Following the latest developments, Europe’s Stoxx 600 Index slid 0.9%, and S&P 500 futures were edging lower by 0.4%. The yield on 10-year Treasuries also declined by seven basis points to 4.34%, whereas the yield on German bond slumped to the lowest since October.
Although the moves were not drastic, they highlighted a sense of concern in the markets about the turn of events in the Russia-Ukraine war. "For the moment the market reaction is contained, some are still in a wait-and see-mode," Bloomberg quoted Andrea Tueni, head of sales trading at Saxo Banque France, as saying.
