Daily market commentary: The US dollar spiked following reports of a flare up in tension between Ukrainian and Russian forces

Gold

Gold is up during early Thursday trading, approaching the multi-month high reached earlier in the week. The precious metal’s strength arises from concerns over developments in Eastern Europe, where the impasse between Russia and the West continues to be a cause for concern. Such a climate is conducive to greater demand for gold, due to its haven status, while the precious metal is also benefiting from a moderate dollar sell-off. Yesterday’s release of the latest FOMC minutes revealed a sentiment amongst the Fed’s monetary policy officials that was less hawkish than some had expected, leading to moderate dollar losses, which benefited gold due to the inverted correlation between the two assets.

Ricardo Evangelista – Senior Analyst, ActivTrades

Oil

Oil is back on the front foot during early Thursday trading, recovering some of the losses recorded over the previous two sessions. The stand-off between Russia and the West over Ukraine remains a cause for concern, as contradictory messages are generating uncertainty over the real possibilities of armed conflict and resulting sanctions on Russian exports. After Russia announced a partial withdrawal of troops from the border with Ukraine, oil prices eased down from multi-year highs, but the veracity of the withdrawal is still being questioned by Western governments and this is driving oil prices up, as traders re-price the geopolitical risks. In current market conditions where supply is already tight, the export sanctions on Russian energy exports likely to be imposed after any conflict, would create even more scarcity and potentially drive the price of the barrel beyond the $100 mark.

Ricardo Evangelista – Senior analyst, ActivTrades