There is a significant difference in the responses of oil and gold to the media frenzy triggered by a comment by Polish Foreign Minister Radoslaw Sikorski on Tuesday, Aug. 5. “There are several battalion groups there. There is a large concentration of military hardware there. These things are being done just to exert pressure. Or to enter,” he said. There was nothing new in his comments, but nonetheless, in the ensuing furor, gold took off. The annotated tick chart of gold futures shows its rise since that time.
Please click here for an annotated tick chart of gold.
Gold has traditionally been a hedge against geopolitical instability. It is understandable that the trigger-happy momo crowd was influenced by the media frenzy and bought gold. However, oil behaved very differently. Take a look at the annotated tick chart of oil futures since Sikorski’s comment.
Please click here for an annotated chart of oil.
Russia is the third-largest producer of oil in the world behind Saudi Arabia and the United States, producing over 10.5 million barrels of oil per day. About 15% of the world’s oil exports are from Russia. The country is also the second-largest producer of natural gas after the United States. Europe is highly dependent on Russian oil and gas.
At almost every other key junction in the Ukraine conflict, oil prices, as well as gas prices, in Europe have spiked. As the chart shows, oil did not spike nearly as much as gold…Read more at MarketWatch
