For the sixth day now, Russia's invasion of Ukraine has been met with fierce resistance. This brought many countries together to condemn the actions of Russian President Vladimir Putin, applying the most severe sanctions ever imposed. The European Union, the United States, Japan, and Canada have formed a coalition to pressure Putin to stop hostilities. Even the neutral country of Switzerland has joined the alliance, imposing sanctions designed to hurt Putin and the Russian economy in the hope that Putin will back down.
The combination of defiance by Ukrainian soldiers and citizens and sanctions hardened Putin, forcing him to accelerate the invasion. Rockets have reportedly hit Ukraine's second-largest city, Kharkiv, and a 17-mile convoy of Russian troops and military equipment is approaching Kyiv.
A peaceful solution to the crisis in Ukraine seems unlikely, if not impossible. The Russian leadership delivered an ultimatum, resolutely declaring that it would not give up its military presence unless Ukraine committed itself not to join the NATO alliance. On Tuesday, Ukrainian President Volodymyr Zelensky applied for membership in the European Union and NATO. Both countries have shown categorical attitude towards each other, which makes a diplomatic solution unattainable.
Russia continues to face ever-increasing international isolation. Protests around the world condemned its actions. Ukraine has now applied for membership in the European Union.
The financial implications of its actions have sent a wave through the financial markets, with global equities plummeting and crude oil now above $110 a barrel. Russia's military actions have increased inflationary pressures around the world.
Before the invasion, inflation in the United States hit a 40-year high of 7.5%, the combination of crude oil prices above $100 a barrel and skyrocketing food prices are sure to add to inflationary pressures around the world.
The flight of market participants to safe-haven assets is a direct result of the Russian invasion and rising inflation, while the price of gold continues to rise almost in a parabola. The first resistance gold could face is the $1975 level, the high reached on Thursday, February 24, when Russia launched its invasion.
With rising inflationary pressures and a geopolitical crisis, the price of gold could top $2,000 an ounce. It may even exceed it.
