Wednesday saw gold prices move back over $1,300 an ounce as news broke of a Russian troop build-up on the Ukraine border. There was also some negative economic news coming out of the euro zone, with Italy officially falling back into recession, according to The Wall Street Journal. Gold rallied because it is an asset that is sought out during times of economic and political uncertainty. This is the first time gold has been back over $1,300 an ounce since July 29th.
According to MarketWatch, Russia is believed to be sending troops to the border with Ukraine. On top of that, the Polish Foreign Minister, Radoslav Sikorksi, issued a warning that a Russian invasion appears imminent.
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“The weakness in the equity markets, the conflict in Ukraine, all of it is putting people on edge,” Peter Hug, director of precious metals at Kitco, told The Wall Street Journal.
Gold has recently been taking a hit, due to positive U.S. economic data and a somewhat optimistic report from the U.S. Federal Reserve. The dollar has also strengthened a bit as inflation continues to be held in check.
In an interview with MarketWatch, Walter de Wet of Standard Bank recommends selling during any sign of a rally in gold prices.
“The 200-day moving average (MA) is at $1,284. If gold moves below this, we’d expect further long liquidation as well as new shorts to enter the market,” he said. “We maintain that, from a risk/return perspective, there’s no point in entering new shorts until gold sticks below its 200-day MA.”
In other markets, silver also rallied to $20.02 an ounce, since gold and silver typically move in the same direction.