Geopolitical events have a way of roiling markets and giving credence to the reason why so many traders/investors will not touch commodities. We were reminded of this by the wild price action occurring in the gold market, and, to the surprise of some ( but not grain traders ) the wheat markets.
Gold had been pressured earlier in the session on De-escalation of tensions over in Ukraine. Yesterday it was fears that a Russian humanitarian relief column was a Trojan horse which would foment war. Earlier today when it became clear that there were no weapons, troops, etc., in the convey, gold promptly sold off. Then around mid-morning, up went the yellow metal, recapturing the $1300 level as reports filtered into the market that Russian forces had crossed the Ukrainian border and been engaged by their troops.
Wheat, which had also been under pressure earlier in the session, immediately shot higher as panicked bears began running for cover. Ukraine is a major wheat producer and traders are nervous over any impact that military tensions might produce as far as wheat exports from that country go. Last I saw, Ukrainian wheat ( which is shipped from Black Sea ports ) is priced below US wheat.
Now the market has to sort through the news and see what has actually taken place. Suffice it to say for now, safe havens which were ignominiously thrown out and discarded early in the session, are suddenly now all the rage once again. Who knows by the end of the session they could all be jettisoned...
Never a dull moment....
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