As global geopolitical tensions escalated over Ukraine, investors have switched to defensive sectors and safe havens such as Treasury bonds and gold futures. One of last week's sessions saw the S&P 500 record its worst daily percentage decrease in two weeks.
The Dow Jones Industrial Average (.DJI) finished Friday’s session at 34,079.18, down 615.78 or -1.77% for the week, the S&P 500 (.SPX) dropped 63.74 points (-1.44%), to 4,348.87 and the Nasdaq Index (.NDX) slid 223.86 points (-1.57%), to 14,009.54.
The situation in Ukraine has added to investor uncertainty surrounding the Federal Reserve’s plans to tighten its monetary policy to combat inflation.
Gold futures soared to an eight-month high on Thursday after US President Joe Biden claimed that there was every evidence Russia was planning an attack on Ukraine. At the same time, Moscow accused the US of disregarding its security requests.
Gold futures for April closed the week at $1,899.8 per ounce, its highest level since June. As a result of the Russian anxieties, investors raced into US Treasuries and gold as safe-havens.
Currently, gold and gold stocks are gaining. However, if tensions between Russia and Ukraine lessen, gold and other safe-haven investments could quickly reverse. That said, even if the present Russian situation passes, the market will still be dealing with high inflation and a Federal Reserve on the verge of raising interest rates aggressively.