Gold prices hit a nearly nine-month high in today's trading. The main catalyst came after Russia ordered military forces into the breakaway region of eastern Ukraine, leading to increased demand for the safe haven metal.
Tuesday (22/2) at 0820 WIB, spot gold price rose 0.2% to US$ 1,909.54 per troy ounce, after reaching its highest level since June 1 at US$ 1,913.89 per troy ounce previously.
Similarly, the price of US gold futures for April 2022 delivery jumped 0.7% to US $ 1,913.60 per troi ounce.
The main sentiment for gold came after Russian President Vladimir Putin recognized two breakaway territories in eastern Ukraine as independent territories on Monday.
Next, Putin ordered the Russian Army to launch, what Moscow calls a peacekeeping operation, into the Luhansk and Donetsk regions, which are in Eastern Ukraine. This has accelerated a crisis that the West fears could spark a major war.
As a result of Russia's remarks, US President Joe Biden signed an executive order banning trade and investment between US individuals and the two breakaway territories in eastern Ukraine, the White House said.
Meanwhile, yields on the benchmark 10-year US Treasury bond slipped, on the back of the Ukraine crisis and bets on a US Federal Reserve rate hike, moving away from more than two-year peaks hit last week.
On the other hand, Federal Reserve Officials agree that with inflation tightening its grip on the economy and employment strong, it is time to raise interest rates, but also that any decision will hinge on meeting-by-meet inflation analysis and other data.
While bullion is considered a hedge against inflation and geopolitical risk, rising interest rates will increase the opportunity cost of holding non-yielding bullion.
