- Gold Prices Soar As Russia Invades Ukraine
- Investors Turning to Gold as a Safe Haven
- Analysts Predict Record Prices to Continue Rising
Russia Attacks Ukraine
Russian forces attacked Ukraine on Thursday. The assault was the biggest attack by one state against another in Europe since World War Two. Putin declared what he called a “special military operation” two days after sending troops into Ukraine’s eastern breakaway regions. The latest news follows months of Russian military buildup near Ukraine’s borders with troop numbers counting as many as 150,000.
Investors seeking a safe store of value flocked to gold. The equities markets plummeted into the red as investors left. The Dow dropped 600 points after the attack began. There was a broad sell-off with investors selling shares en masse. The invasion comes as global equity markets were already reeling because of decades-high inflation stemming from the pandemic.1
Gold jumped more than 3% higher and was trading above $1,950 per ounce. It has risen about 8% in February alone. Gold is at its highest price since late 2020.
Rapidly rising U.S. gold futures show that the demand for gold will continue to increase. The Cboe Volatility index, a gauge of Wall Street fear, spiked to above the 37 level on Thursday. There is a history of gold prices increasing as the Volatility Index increases.2
Leaders called for devastating sanctions on Russia. They want to cut them off from SWIFT. SWIFT is the system that links Russian banks to the global financial system. Sanctions will isolate Russia’s gold supply. Russia is the world’s third-largest producer of gold. They have been building up their reserves for years.
Sanctions will drive the price gold up even more. “As long as the breadth and length of the conflict remains uncertain, I don’t see investors wanting to sell any of these Russia sensitive metals or energy,” said Tai Wong, an independent metals trader in New York.3
If Russia invades Ukraine beyond the separatist regions there will be a shock to the equity and oil markets. The fallout could have sizeable negative impact on the global economy. Fuel prices will increase. Which, in turn, increases inflation on everything else. As inflation rises, investors will purchase gold to hedge against it. This will push the price of gold up even higher.
Jeffrey Halley is a senior market analyst at OANDA. He said, “Prices could continue rallying towards resistance at $1,960 an ounce and test $2,000 in the next few sessions. Gold is a haven asset along with the U.S. dollar and this is its day. We could inevitably see new all time highs in gold.”
Current events will be forcing gold prices up for all the above reasons. The time to protect your portfolio with precious metals is now. Contact American Hartford Gold to learn how.
