Gold prices are moving to a higher value at a rate that has not been witnessed in a while. Russia’s invasion of Ukraine and the increasingly heavy Western sanctions against Russia raise oil prices, while increasing uncertainties over the economies and pushing investors to seek security. In this environment, senior analyst Gary Wagner’s market comments and forecasts in his own words. cryptocoin.com We have prepared for our readers.
Gold prices continue to rise
On Monday, the most active April 2022 contract on a gold futures basis opened at $1,920 and closed at $1,900 after rebounding at $1,893. Gold prices rose above $40 on Tuesday, accelerating the defined uptrend that started in the first week of January. The rally continued on Friday as well.
At the time of writing, April futures are currently up $39.40 (2%) and are pegged at $1,974.90. That means gold has gained $74.90 this week, posting a weekly net gain from Monday’s low to today’s current price of 4.3264%.
Added to the January 31 price increase, this success reveals a profound truth. In just over a month (January 31 – February 4), gold prices gained $194.90, up 10.94% percent.
“Gold is one of the most intrinsic safe-haven assets”
Gold not only provides excellent protection against inflationary pressures, but also responds quickly to geopolitical uncertainty and rising inflation. Recent gains in gold are based on both an increase in inflation and its susceptibility to the geopolitical crisis. In this example, it is a combination of these two events occurring at the same time. This synergetic effect of both geopolitical uncertainty and current inflationary pressures has magnified the impact of gold on the global economy.
Most worryingly, the geopolitical crisis in Ukraine has added a new layer to the inflationary pressures. A few months ago, Russia’s invasion of Ukraine was unthinkable. Since the Second World War, no sovereign country has invaded another sovereign country under false pretenses. While Russia claimed that its actions were to act as peacekeepers to protect pro-Russian separatists in eastern Ukraine, it announced that these two regions are now independent countries. But the truth is that Russia’s intention was to destroy its army and overthrow its government and install a puppet government sympathetic to Russia.
Before the Russian invasion of Ukraine, inflationary levels were already at a 40-year high. Recent data showed that the CPI (consumer price index) reached 7.5% annually. This is the highest level of inflation since February 1982. According to recent events, inflationary levels are certain to rise even higher.
The rise in inflation can be directly attributed to two main factors. The primary catalyst is the rising cost of crude oil, which trades directly at $115 a barrel. Second, Ukraine’s ability to produce agricultural products for export to Europe has decreased or disappeared.
Gold could challenge all-time high
The obvious consequence of the Ukrainian occupation’s impact on current inflation levels is profound. It almost certainly guarantees that inflationary pressures will continue to rise to higher levels, causing extreme hardship for global citizens who need these goods to survive.
For the reasons we mentioned above, gold performed very well and experienced a dramatic price increase. The precious yellow metal acts as a safe-haven asset that should continue to appreciate as a hedge against other investment classes during times of political uncertainty and high inflation. The sad truth is that the current conflict in Ukraine will most likely not have a quick and peaceful resolution. It will take a long time to finish.
Based on this assumption, it is almost certain that the Ukraine/Russia crisis will not be resolved quickly and current inflation levels will continue to climb to higher levels. If this assumption is correct, it’s easy to assume that at some point gold will challenge its all-time high of $2,088 and trade at a new record price.
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