Gold and Brent prices rallied to multi-month highs on Monday on escalating geopolitical tensions as Ukraine mobilised for war after Russia bloodlessly seized Crimea, an isolated Black Sea peninsula where Moscow has a naval base.
However, riskier assets such as stocks fell across the globe. The BSE Sensex slumped 0.8 per cent or nearly 200 points after holding up for most part of the session, while the broader Nifty traded below the key 6,250 levels, dropping over 50 points.
European markets also traded with sharp cuts as of 2.20 p.m. France's CAC 40 benchmark traded down 1.6 per cent, while Britain's FTSE 100 stock index was down 1.1 per cent. Earlier, Japan's Nikkei average closed 1.3 per cent lower.
Commodity prices tend to rise in conflict situations, so the current rally in gold and crude prices is no different, analysts said.
Jim Rogers, chairman of Rogers Holdings told NDTV that war is not good for any asset except commodity prices.
"If we have a war, commodity prices will go up, but I expect things to cool down," he added.
Russia is the world's biggest oil producer and Ukrainian Prime Minister Arseny Yatseniuk said Moscow's move to use military force was a "declaration of war".
Putin secured permission from his parliament on Saturday to use military force to protect Russian citizens in Ukraine and told US President Barack Obama he had the right to defend Russian interests and nationals, spurning Western pleas not to intervene.
Brent crude hit a session peak of $111.24 per barrel, its highest since January 2. Cash and US gold futures hit an intraday high around $1,345 an ounce.
"I think there's short-term support for gold because of the turmoil. I am looking to find out whether it will break a previous high of $1,361.60 touched in October last year," said Joyce Liu, investment analyst at Phillip Futures in Singapore.
In India, the March gold contract was up 1.2 per cent at Rs 30,443 per 10 gram.
(With inputs from Reuters)