Last week’s rally in gold, during the run up to the Crimean referendum, had seen it add $52 to its peak. With tensions seeming to ease, or at least the possibility of military action becoming less threatening, the safe-haven status of the precious metal has become less alluring.
Today’s speech by Russian president Vladimir Putin confirmed the nation had welcomed Crimea into its family. In doing so, it has taken another step to ensuring this becomes a permanent state of affairs. The ball is now in the court of the EU and US; how far this escalates is up to them.
Over the last month, gold has found some support around the $1340 level. With issues in the Black Sea unlikely to be resolved in the near future, there could still be periods of further uncertainty where the attractiveness of gold’s status will rekindle investors interest.
In the natural ebb and flow of price movements, it is not too surprising that, following gold's run higher, we have seen a correction in the price. The $1400 level will no doubt remain a psychological barrier, but not necessarily one that can’t be broken. Any close below $1340 might tempt us to reassess the chances of this run being extended.