Gold prices climbed more than 2% on Thursday as Russian forces attacked Ukraine. Bullion prices already rose by about 8% this month and are set for their highest monthly gain since July 2020.

Spot gold is currently trading at $1,943.21 per ounce as of 0730 GMT.

Russian President Vladimir Putin authorized a “special military operation” in Ukraine, which could start a war in Europe. His troops fired missiles in military command centers in Kyiv and the cities of Kharkiv, Odesa, and Mariupol. Putin said he ordered the attack because Russia cannot feel, safe, develop and exist with a constant threat from modern Ukraine. But he emphasized that Russia’s plans do not include the occupation of Ukrainian territories and will not impose anything by force.

Ukrainian Foreign Minister Dmytro Kuleba described the unprovoked attack as a war of aggression. And he said on Twitter that Ukraine would defend itself. The government declared a state of emergency and compulsory military service for all men of the fighting age.

The West began imposing sanctions on Russia. The U.S. imposed sanctions on the company building the Nord Stream 2 gas pipeline while Germany froze approvals for the project. Meanwhile, the European Union blacklisted Russian lawmakers, froze their assets, and banned travels.

OANDA senior market analyst Jeffrey Halley commented that gold has regained its status as a safe-haven asset and could post new all-time highs in the coming weeks.

City Index senior market analyst Matt Simpson added that the sanctions against Russia might not have their intended effects. He suggested that the West is at a disadvantage and that is the reason why gold prices are rising. Some experts expressed concerns about the impact of sanctions on key commodities produced and exported by Russia.

Russia is the third-largest gold producer in the world, producing around 310 tons in 2021. It is also a major producer of other commodities, such as aluminum, wheat, palladium, and platinum.

On the technical front, DailyFX strategist David Song said gold’s Relative Strength Index is pushing into overbought territory for the first time this year. It reflects increased buying interest. He predicted the bullion to fresh 2022 highs due to the weakness in global equity prices and the deterioration in risk appetite.

Song also suggested that the U.S. Personal Consumption Expenditure (PCE) Price Index remains supportive of the bullion. The index is expected to increase for the first consecutive month to reach the highest reading since 1983.