NEW YORK (Reuters) – The U.S. Gold prices surged to an eight-month high on Thursday after U.S. President Joe Biden said Russia had every reason to strike Ukraine. At the same time, Moscow accused Washington of disregarding its security requests.
Despite solid corporate profits in Europe, a global equity index sank more than 1% as the Ukraine crisis worsened. Russian-backed rebels and the Ukrainian military accused each other of firing shells across a cease-fire line. Britain claimed Russia was attempting to create a pretext for an invasion.
In a sign of growing concern about Ukraine, U.S. Secretary of State Antony Blinken warned the U.N. Security Council that Russia’s probable invasion of Ukraine is a “moment of risk” for the safety of millions of people. Russia denies any intention of invading its neighbor.
Government bond rates in the US and Germany decreased. At the same time, oil dropped down as discussions to renew a 2015 nuclear deal that would allow Iran to resume oil shipments to consumers such as South Korea approached their final stages. However, losses were limited by rising tensions between Russia, the world’s largest oil supplier, and the West.
According to Marc Chandler, the chief market strategist at Bannockburn Global Forex, investors were already looking ahead to the long weekend. Monday was a U.S. holiday, and markets closed.
“As a market member, you are not encouraged to resist the risk-off mindset ahead of the weekend when anything may happen,” Chandler said.
The pan-European STOXX 600 index sank 0.74 percent, while the MSCI world stock index fell 0.85 percent.
The Dow Jones Industrial Average sank 1.19 percent, the S& P 500 slid 1.18 percent, and the Nasdaq Composite plunged 1.47 percent on Wall Street.
Asia MSCI’s broadest index of Asia-Pacific equities increased by 0.15 percent.
Concerns about a super-hawkish Federal Reserve rate-tightening campaign subsided overnight as minutes from the Fed’s most recent policy meeting suggested a moderate, even dovish approach.
Concerns over Ukraine prompted investors to purchase government debt. As a result, rates on the 10-year Treasury note in the United States fell 8.2 basis points to 1.963 percent. In comparison, yields on Germany’s 10-year government bond fell 0.2 basis points to 0.229 percent.
The Russia-Ukraine situation has alarmed investors, who must simultaneously watch the Fed and other central banks’ attempts to combat growing global inflation.
Spot gold rose 1.5 percent to $1,895.77 per ounce after briefly approaching the critical $1,900 level.
Oil prices plunged by more than 2% before leveling out. Crude futures in the United States sank 1.56 percent to $92.20 per barrel, while Brent traded at $93.30, down 1.59 percent on the day.
The dollar, also seen as a haven, initially surged against most currencies. Still, gains faded, and the greenback was later modestly weaker, indicating that investors were not yet panicked about Russia-Ukraine hostilities.
However, the Japanese yen, which investors frequently buy as a haven, reached its highest level since February 7.
The dollar index lost 0.058 percent to 114.98 per dollar, while the yen rose 0.42 percent to 114.98 per dollar.