US and European futures are trading almost flat while traders are factoring in the prospects of stricter sanctions against Russia for alleged war crime in Ukraine. The US is expected to impose more sanctions on Russia this week. The US’s European allies have also indicated that they want to hold Russia responsible for the alleged atrocities.

Geopolitical Tensions 

Geopolitical tensions don’t seem to be going away anytime soon. Recently, the US has warned that it is likely that Russia will intensify its military operation in Ukraine. Remember, Putin reduced the Russian military operation in Kyiv, but then Russia attacked other parts of Ukraine. What we have is confusion once again because, on the one hand, it does seem like Russia is scaling down its military presence. Still, on the other hand, the US maintains that Moscow is only revising its goal after failing to capture Kyiv.

In addition to this, as Russia’s military is accused of committing war crimes in Ukraine, the US Treasury has blocked dollar debt payments from Russian government accounts at US financial institutions. The Treasury Department’s Office of Foreign Assets Control will no longer allow dollar payments from Russian government accounts at US banking institutions.

Oil 

Oil prices saw another jump yesterday as pressure is on European countries to punish Russia for its action in Ukraine by imposing energy sanctions. The invasion of Ukraine by Russia in February heightened supply fears that were already weighing on pricing. Sanctions against Russia and consumers’ avoidance of Russian oil have already resulted in a decline in output, raising worries of much more significant losses.

Germany, the largest economy in the Eurozone, has made its position clear that it doesn’t want to impose energy-related sanctions on Russia, especially gas, as the country has no short-term fix. French President Emmanuel Macron has suggested that there should be sanctions on Russian oil and coal. Nonetheless, the pressure from the US has created concerns among traders and investors about the energy supply.

Another factor traders keep a close eye on is the Iranian nuclear deal. Negotiations on Iranian nuclear paused yesterday in Vienna, which also supported oil prices yesterday. But the pause doesn’t mean that conversations are over as negotiations behind doors are taking place, and lifting sanctions on Iranian oil would ease oil supply concerns. So far, Iran has blamed the US for halting the conversation.

Gold 

The precious metal is likely to see higher moves and soaring volatility now as traders make sense of renewed pressure of further sanctions on Russia by the US and its allies. There is no doubt that current sanctions on Russia have worsened soaring inflation, and gold, a hedge against inflation, increased its price. In addition to this, pandemic-related supply chain issues are still very much anchored in place, supporting higher inflation. The fact is that gold prices are likely to maintain their higher trend because there is no hope insight for a better relationship between the US and Russia. This is keeping gold traders on edge due to concerns about geopolitical tensions.