Gold Prices Decline as Tensions Between Russia and the West Ease

As the expectations of a dispute between Russia and Western countries eased, the price of gold slid on Tuesday. Falling by $13.90 or one percent, the actively traded April contract for gold settled at $1,359 per ounce.

The price of gold rose over a dispute with Crimea, as traders shifted money out of other markets. On Sunday, a majority of voters in Ukraine’s region of Crimea voted to join Russia, breaking away. Russian President Vladimir Putin told the Russian Parliament not to believe in the speculation that Russia was looking to take over other areas of Ukraine.

The price of gold has always been a tricky thing, and the Crimean situation is only one of the many factors. One of the issues at hand is that most countries require some kind of stamping that states the gold karat, but few enforce and hold jewelers accountable.

Another issue is the simple effect of supply and demand. According to the Business Insider, “The price of gold, therefore, depends on how much of the accumulated supply owners are willing to part with at any given moment.” This means that if people were to start selling off their gold in favor of other goods, the price of gold sinks, whereas if they were to hoard it, the price rises.

In the past 10 years, gold hit a peak value of $1,889.70 in 2011, rising slowly from a low of $375.00 in 2004. Though this indicates a steady climb, examining the past two years of gold prices shows that it’s falling.

If this fact scares investors into selling, just as the Crimean situation did, it could cause gold’s price to plunge.

“The Ukraine situation hit gold today,” said senior commodity consultant at INTL FCStone Edward Meir. “Putin said he’s not going to stir anything up, and gold fell on the back of those remarks.”

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