Spot gold price shot up slightly on Wednesday and is expected to be on an upward trend in the following days, as fears of increasing tension at the border of Ukraine placed a serious stress on global equities.
Gold jumped 0.2% to $1,289.80 per ounce after Wednesday’s first trading session.
Despite its upscale trend, however, gold may face difficulty in breaking through the $1,300 mark, which can be linked to the strong economic data of the United States.
“Gold could face difficulty breaking through $1,300 because the dollar is doing really well,” said commodities expert Chen Min from Jinrui Futures. “The only supporting factor is geopolitical tensions, and unless tensions escalate drastically over Ukraine, gold won’t be able to gain much.”
The precious yellow metal is an investment that can cover assets in times of inflation or political tension, which is why its prices are increasing slightly. Making a gold investment abroad is a strategy often recommended by financial sites so that investors would have somewhere to turn to in case of financial failure due to an invasion.
The Russia-Ukraine crisis and the tension between Egypt and Gaza are both primarily responsible for the current pressure on equities, as well as gold’s 7% price increase in 2014.
In Asia, gold ticked higher on Tuesday due to a weak economic survey on the Chinese market. China’s service sector has slowed down sharply beginning July this year, severely affecting stocks and increasing gold’s prices. According to data, China’s service sector decline in July was the lowest that the country has experienced in a 9-year time frame.