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Ukraine Tensions Escalate and Oil Prices Follow Suit & The Fed Continues to Debate Rate Hikes

Gold climbs to 4-month high, as Ukraine tensions escalate

Gold rose to its highest level since November, as tension between Russia and Ukraine continues to escalate.

This comes after the U.S. National Security Advisor Jake Sullivan warned that an invasion of Ukraine could come “any day now”.

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In a bid to calm tensions, Russian Foreign Minister Sergey Lavrov reportedly has advised President Putin to engage in further diplomatic talks. However, Putin remains firm in his stance that Ukraine should never be permitted to join NATO, a move he believes could compromise the safety of Russians.

A statement from the U.S. press team stated that, “President Biden made clear that the United States would respond swiftly and decisively, together with its Allies and partners, to any further Russian aggression against Ukraine. The two leaders agreed on the importance of continuing to pursue diplomacy and deterrence in response to Russia’s military build-up on Ukraine’s borders”.

XAUUSD hit an intraday high of $1,871 on the news.

GBPUSD volatile as Fed debate rate hike

GBPUSD was once again volatile to start the week, as members of the Federal Reserve continued to debate the extent of an upcoming rate hike. St. Louis Fed President James Bullard has made it clear he believes that a 100-basis point hike is needed, whilst others remain on the idea of hiking by 50 bp.

Speaking on Monday, Bullard stated that, “It was really October, November, December, January that called into question any idea that this inflation was naturally going to moderate in any reasonable timeframe without the Fed taking action”.

Following Bullard’s comments, Kansas City Fed President Esther George stated that, “It is always preferable to go gradual. Given where we are, the uncertainties around the pandemic effects and other things, I’d be hard-pressed to say we have got to get to neutral really fast”.

GBPUSD fell to an intraday low of 1.3495, its lowest level in 2-weeks.

Fresh 7-year highs for Oil prices as Biden warns Putin

Oil prices rose to a fresh 7-year high to start the week, as markets responded to growing tensions with Russia and the United States over Ukraine.

WTI crude oil prices rose an intraday high of $94.98 on Monday, with Brent climbing to a high of $96.44.

💡 Bidens Warnings
This comes following talks with President Biden and Putin over the weekend, where it is reported that the U.S. President warned his counterpart that an invasion would cause “widespread human suffering” and “diminish Russia’s standing” in the world.

These reports follow on from comments by British Prime Minister Boris Johnson who said that, “things are as dangerous as I have seen them in Europe for a very, very long time”.

“The purpose of trading is not being right, the purpose is to make money, and I think that’s my number-one rule. Don’t get hung up on your current positions.”

-Dana Allen.

Eliman Dambell

Senior Market Analyst