Tensions in Ukraine may boost Gold in near term

RUSSIA February 28 2014 11:04 AM

NEW YORK (Scrap Register): Gold could draw safe-haven demand if the tensions surrounding Ukraine continue to escalate, said HSBC in a research note.

Russia has been conducting military exercise near the border with Ukraine this week. In particular, tensions are high in Crimea since President Viktor Yanukovich was removed last week.

HSBC cites a news report in which a Russian official said that Russia wants to avoid a break-up of Ukraine, but in the case of a secession of Crimea, an autonomous parliamentary republic within Ukraine, Moscow would feel compelled to back it militarily.

“Gold is often sensitive to geopolitical developments, especially when they involve large economies or important regions. Should events in Ukraine deteriorate and involve neighboring countries, gold could benefit from increased safe haven demand,” said analysts with HSBC, via Kitco News.