The Russo-Ukrainian war and the following sanctions by the US and western countries have surged crude oil and gold prices to their highest as it threatens to disrupt exports of commodities like energy and metals.
According to analysts, Russia's war with Ukraine continues to roil global financial markets and global supply chains, which is driving commodity prices higher and adding further momentum to gold.
While off its highs, overnight gold prices pushed above $2,000 an ounce only a few weeks after the war began - hitting their highest level since September 2020. The ongoing conflict in Eastern Europe is also generating safe-haven demand for gold. However, analysts have said that gold is also seeing new momentum on rising commodity prices pushing inflation higher.
Meanwhile, oil prices jumped 10%, rising to $130 a barrel - the highest in 14 years.
Russia is the world's largest oil producer. The Ruso-Ukraine war has disrupted oil production from Russia as the US and western countries have imposed new financial and economic sanctions on Russia. The sanctions limit Russia's ability to do business in major currencies and block the 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 rises in oil price increased the import bill – thus increasing fuel prices in the South Asian country.
Gold is considered a safe haven for investors. China, Australia, and Russia are the world's top producers of gold. When the sanctions against Russia went live, they stiffen the global supply of the precious metal.
The squeeze in supply came at a time when the equity market has become volatile and investors are shifting some of their investment to gold. This naturally raises the price of gold.