why will financial markets react badly to gold sell off

Some of the bullish factors that drive the gold price are based on the fact that gold is an alternative asset class Gold can be a hedge against currency risk, and a hedge against inflation Gold is also seen as a safe haven asset Gold is a liquid asset, i e it can be sold for fiat currency, at a price that is reasonable and readily available These factors have historically driven the gold price In recent years, the price of gold has been more closely correlated with the price of oil The price of gold has been closely tracking the price of oil for the last decade It is clear that the gold price is primarily driven by the price of oil This brings us to the key question Why will financial markets react badly to gold sell offs? We are in the midst of a geopolitical crisis The price of gold is being supported by the risk of a war in the Middle East Western nations are bombing the Middle East, in an effort to slow the advance of ISIS There is an oversupply of oil. Once the oversupply is realized by full storage statements the oil price will drop. Sudden drops in oil price will cause drops in gold prices. The price of oil is being supported by the risk of a war with Russia The price of gold is being supported by the fear of a supply disruption It is clear that there is a direct relationship between the price of gold and the price of oil As long as the geopolitical crisis continues, the price of gold will be supported If the geopolitical crisis ends, then the price of oil will drop, and the price of gold will drop with it What is the geopolitical crisis? The geopolitical crisis is the risk of a war with Russia and China. The entire crisis is centered in Ukraine and Taiwan The EU and the United States have imposed sanctions on Russia the us is threatening political and international law action against China These sanctions have hurt the Russian economy, and caused the Russian stock market to drop by 20 percent China commerce will be adversely affected by international law The Russian response to the sanctions has been to intervene in the Ukraine The Russian response has been to send troops into Ukraine, and to annex Crimea This has caused the Ukrainian government to stop paying its debt, to foreign creditors This has caused the yield on the Ukrainian bond to rise to 20 percent The Ukrainian government is currently running a budget deficit, and the economy is in recession Ukraine and Russia are in financial ruin. China is the lender of last resort.