Sanctions by the US and western countries on Russia after it invaded Ukraine have been triggered crude oil and gold prices to their highest.
This is because the situation threatens to disrupt Russia’s exports of commodities like energy and metals.
Note that Russia is one of the top most producers of oil and gold.
Russia’s full-scale attack against Ukraine along with sanctions by the US and western countries have triggered crude oil and gold prices to their highest. This is because the situation threatens to disrupt Russia’s exports of commodities like energy and metals. The invasion of Ukraine by Russia happened in early morning hours on Thursday.
Why did oil prices rise?
Oil prices have been constantly rising for over a week on the growing tensions between Russia and Ukraine as the circumstances would disrupt oil production from one of the world’s largest oil producers – Russia.
The US and western countries have imposed new financial and economic sanctions on Russia for attacking the Ukraine, which has a potential to disrupt exports from one of the largest producers of oil.
The wave of these sanctions impedes Russia's ability to do business in major currencies and blocks provision of any financial support to Russian banks and state-owned enterprises. The move hit the Indian economy badly as it imports over 80% of its oil needs and rise in oil price increases the import bill.
Why are gold prices rising?
Russia is the world’s third largest producer of gold after Australia and China. So, these sanctions by western countries against Russia are expected to stiffen into the global supply.
Also, at a time when the equity market has become volatile and risky investors are shifting some of their investment to gold, which are considered as safe haven in difficult times.
Geopolitical uncertainty has raised premiums for safe-haven commodities like gold and silver, while Russia supplies crude and natural gas to most of Europe, which has resulted in rising of oil and gas prices, said Prathamesh Mallya, AVP- research, non-agri commodities and currencies at broking firm Angel One.
Russia invaded Ukraine on Thursday, the heat was felt on share market. The Nift witnessed the biggest fall since May 2020 when the Covid pandemic spooked D-Street.
Industry trackers have said the war between Russia and Ukraine along with the likely slowdown in the global economy and create high inflation may trigger a major spike in gold prices and rates could increase by Rs 10,000, according to a Business Today report.
GOLD PRICES LIKELY TO INCREASE
Gold prices rallied on safe-haven buying along with the US dollar on deepening geopolitical risks and fears of severe sanctions on Russia and possible disruption of supplies of commodities.
Tapan Patel, Senior Analyst (Commodities) at HDFC Securities, said gold prices rallied with MCX Gold April futures surging by 2.25 per cent to Rs 51,500 per 10 grams on Thursday.
Experts said gold prices are expected to touch Rs 55,000 this year and Rs 62,000 in the next year, according to the Business Today report.
Kunal Shah, Head of Commodities Research at Nirmal Bang, said gold prices are expected to rocket towards test levels of Rs 54,000 to Rs 55,000 this year and in next year, Rs 60,000 to Rs 62,000.
So, on an average, gold will go up by at least Rs 10,000 in the next two years, Shah was quoted as saying by Business Today.
Amid heavy selling pressure in the global equity market, more than 90 percent of stocks, which traded on BSE, closed in the red on Thursday.
A total of 3,478 stocks traded today on BSE. Out of the total, as many as 3,161 stocks tanked as the fell by 4.72 percent or 2,702 points.
All the 30 components in the pack ended in red. BSE Realty index witnessed the biggest fall at 7.27 percent among sectors. BSE Auto, Telecom, Bankex, Oil & Gas, and Power also lost over 5 percent. Other sectoral indices cracked between 3 percent and 5 percent.
IndusInd Bank, Mahindra & Mahindra, Bajaj Finance, Axis Bank and Tech Mahindra were top laggards. Tata Steel, Maruti Suzuki, HDFC Bank, Bajaj Finserv, UltraTech Cement, Asian Paints, State Bank of India and ICICI Bank also slipped over 5 percent.
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