XTB analysis: Gold might reach USD 1.600 per ounce on Ukrainian region tensions

The tensions in Crimea region might mirror in increased price for gold to reach USD 1.600 per ounce from USD 1.340, the level registered at the beginning of this week, as XTB Romania analysis found.

2014-03-20 11:58:19

The conclusion comes on the findings that gold, among other precious metals, by tradition, represents the safest investment active. On the escalation of diplomatic conflicts in Ukrainian region between Western countries and Russia, a new need for safety emerged and gold re-entered in the first-choice investment portfolio, along with other safety-net exchange as the Japanese yen.

According to XTB analysts, in times of turmoil, the investors usually go for safety against large yields. Hence, the shares have been aggressively sold especially in Europe, a region more exposed to Eastern tensions that US. The German market for instance, delivering a third of Euro exports to Russia, has been the more impacted and lost 6.32 per cent between March 6 and the opening of March 16. Since the beginning of 2014, gold price increased, even if, in the last months, the Federal Reserve (FED) gradually reduced the amounts offered by the financial system by USD 20 billion, to reach USD 65 billion monthly.

The gold price has chances, according to XTB Romania, to keep the same up pace in 2014, helped by the demand registered on Asian markets. However, the achieving of significant yields depends on the perceived stability of global financial and political background. Within this context, the evolution of events in Ukraine region might set the trend.