After Russia’s attack on Ukraine, high levels of volatility are wreaking havoc in financial markets, gold prices are seeing $90 swings and investors are digesting the new geopolitical reality.
Gold prices exceeded $1,970 with first shock
cryptocoin.com As we reported, the precious metals market posted strong gains for most of the day after Russia’s extensive invasion of Ukraine. Gold prices hit a 1.5-year high of $1,976.50. However, as traders reassess the situation, the precious metal fell and closed the session lower. Peter Mooses, senior market strategist at RJO Futures, commented:
The initial shock of what happened overnight in Russia and Ukraine sent all safe-haven metals, especially gold, higher. Other commodities affected by Russia also rose. And as the day progressed, things started to turn around. Margin calls had to be met and traders had to move in and out of their positions due to morning volatility. There was also profit realization.
Joe Biden announces new sanctions
Most of the losses came after US President Joe Biden announced new sanctions against Russia, targeting more of the country’s banks, state-owned companies and Russia’s ability to do business in other currencies, including the dollar, euro, pound and yen. . “This is a premeditated attack,” Joe Biden told reporters on Thursday. Putin is aggressive. Putin chose this war. And now he and his country will suffer the consequences.”
Markets were relieved when they heard that US forces would not fight in Ukraine and that new sanctions were signed to avoid damaging the energy market. “Our sanctions package has been specifically designed to allow energy payments to continue,” Joe Biden explained. The president urged US oil and gas companies not to take advantage of the Russia-Ukraine conflict to raise prices, adding that he would release additional barrels of oil as circumstances warrant. There was another increase in risk sensitivity after Biden decided not to impose sanctions on Putin or separate Russia from the SWIFT international banking system.
Gold prices pulled back as sanctions were mild
OANDA senior market analyst Edward Moya says Joe Biden’s sanctions have largely been inadequate, and this has taken away from risk aversion. Its analyst explains:
Gold prices fell sharply after it became clear today that it will not have a catalyst to push the $2,000 level down. Gold’s afternoon sales accelerated after President Biden announced the next round of sanctions, which many thought wasn’t tough enough given last night’s Russian invasion of Ukraine. The decision not to remove Russia from the Swift banking system means that both Russia and Europe will not suffer additional immediate economic pain.
“We should expect a lot of volatility, especially going into the weekends”
However, precious metals investors should be prepared for more volatility as the Russian invasion of Ukraine continues. Peter Mooses comments on the matter as follows:
The market reaction says sanctions could help and we won’t need as many safe havens overnight as we thought. So we’ve seen some liquidation in metals. Tomorrow we’ll see what Russia’s next move is. We should expect a lot of volatility, especially as we head into the weekends. There is a potential buying opportunity for anyone who wants to go back to the market and go long under.
It’s important to keep in mind that markets can surprise investors, especially in the post-pandemic environment. Finally, Peter Mooses states the following:
In the last two years, we have seen that the market has not reacted as before. We’ve seen stocks and other metals rise when we’ve had bad news with the pandemic, and traders are turning away from metals as a safe haven.
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