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Oil Reaches a 13-Year High & Gold Hits $2K as The Ongoing War in Ukraine Puts Pressure on Markets

Gold hits $2,000 as Russia/Ukraine crisis escalates

Gold prices rose to as high as $2,000 on Monday, as markets continue to react to the on-going war in Ukraine.

The increase in gold came as indices across the globe fell on Monday, with the S&P 500 losing over 2.7% of its value heading into the close of trading.

Markets reacted to news that peace talks between Russia and Ukraine had proved to be unsuccessful, as Russia attacked a Ukrainian bread factory.

💡 What’s being said on both sides
In a tweet, Ukraine’s lead negotiator Mykhailo Podolyak stated that, “In a few minutes, we will start talking to representatives of a country that seriously believes large-scale violence against civilians is an argument”.

Following this tweet, Russia’s defence ministry said that “Attempts by the Ukrainian side to deceive Russia and the whole civilised world…are useless this time”.

XAUUSD is currently trading at $1,998.

Oil prices climb to 13-year high

It was not only Gold which hit multi-year highs, crude oil prices also rose to start the week, as markets brace themselves for more sanctions.

This time the sanctions could see Russian oil impacted, and news of this led WTI crude to climb to as high as $130 per barrel on Monday.

Monday’s intraday high, was the highest level crude has traded at since 2013, Secretary of State Anthony Blinken stated that the U.S. was actively exploring oil sanctions.

💡 Sanctions are working… too well
Despite sanctions placed on Russia working beyond the west’s dreams (or nightmares). Major price fluctuations are expected to force consumers to pay for Putin’s doing.

Despite governments’ efforts to reduce the effects of the sanctions, mainly by not discontinuing energy exports with Russia; many private companies like Shell and BP are withdrawing operations. The worst of the economic downside is yet to come according to many analysts. This is because unlike previous sanctions placed on Venezuela or Iran. Russia has a much larger economy.

Currently, Russia is the world’s main exporter of oil, and accounts for over 7% of the world’s supply.

If this were to come off the table, markets are worried that an undersupply of energy will lead to growing demand, which will in-turn continue to boost consumer prices.

EURUSD falls to lowest level since 2020

The fear of further inflation panicked currency markets on Monday, leading to further shifts in EURUSD.

With oil prices rapidly on the rise, markets expect this to add further inflationary pressures to consumers, creating the need for more central banking intervention.

Despite the ECB remaining firm on its policy of not hiking rates, this may now change, should energy prices continue to climb.

EURUSD fell to an intraday low of 1.0805 during today’s session, which is its lowest point since May 2020.

In addition to this, Germany’s DAX 30 closed almost 2% lower on Monday, with France’s CAC 40 falling 1.30% lower.

“Are you willing to lose money on a trade? If not, then don’t take it. You can only win if you’re not afraid to lose. And you can only do that if you truly accept the risks in front of you.”

– Sami Abusad.

Eliman Dambell

Senior Market Analyst