Aftermath of Russia's 'Ukraine Invasion'... Surge in Returns of Crude Oil, Agricultural Products, and Gold Funds

Inflation Rise Spurs
Agricultural Fund Soars 13% This Year
Crude Oil Price Surpasses $100
Considering Impact of US Interest Rate Hikes
Experts Warn "Caution Needed in Investment"

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] Russia's attacks on Ukraine have fueled rising inflation, causing fund returns investing in crude oil, agricultural products, and gold to surge. However, experts advise caution in investing, as downward pressure may increase during periods of interest rate hikes.

According to financial information provider FnGuide on the 2nd, among the 46 thematic funds as of the 28th of last month, the fund with the highest return was the agricultural products fund, recording a 13.13% return since the beginning of the year. This was followed by natural resources (12.33%), commodities (10.42%), and gold (6.66%) funds, showing high returns in that order.

Geopolitical risks surrounding Russia and Ukraine have stimulated the rise in prices of commodities and gold. As damage to Ukraine, a major global grain exporter, increased, prices of key wheat, corn, and soybeans soared to unprecedented levels. Wheat prices at the Chicago Board of Trade (CBOT) are currently at 1001.75 cents per bushel, with this month's increase approaching 30%.

With Western countries imposing strong sanctions on Russia, the world's second-largest crude oil producer (about 12%), crude oil prices surpassed $100 per barrel on the 1st (local time), reaching the highest level since July 2014. Gold prices (April futures) also broke through $1,900 per ounce for the first time in over a year, rising to $1,943.80.

As the Ukraine crisis shows little sign of resolution, upward pressure on commodity and gold prices may intensify further. Some expect that due to rising inflation, gold prices could reach the $2,500 level in the short term.

However, whether investors should continue to invest in related funds remains questionable. The U.S. interest rate hike is scheduled for this month, and some argue that to curb the inflation surge, the benchmark interest rate increase should be 50 basis points (1bp = 0.01 percentage points). Hwang Byung-jin, a researcher at NH Investment & Securities, explained, "In the case of gold, a buying strategy riding on short-term geopolitical risks will amplify steep downward volatility during periods of interest rate hikes." He added, "Western countries are releasing strategic petroleum reserves, and since they maintain the policy not to disrupt commodity supply chains amid sanctions on Russia, the upward trend in oil prices will also be controlled."

This content was produced with the assistance of AI translation services.