Russia’s war with Ukraine continues to wreak havoc on global financial markets and global supply chains, according to some analysts, pushing up commodity prices and giving gold more momentum. Spot gold price crossed the psychological $2,000 mark after a long hiatus on Tuesday and was trading at $2,016.5 at the time of writing, up 0.96% daily. Market comments and price predictions from professional analysts cryptocoin.com compiled for our readers.
Gold price sees new momentum with rising inflation
The gold price has reached its highest level since September 2020, climbing above $2,000. The precious metal rally came as oil prices rose 10% to $130 a barrel, a 14-year high.
According to many analysts, oil prices skyrocketed after the US announced that it was considering sanctions on Russia’s oil exports due to its entry into Ukraine. Continuing conflicts in Eastern Europe are also creating safe-haven demand for gold. However, according to analysts, the gold price is seeing new momentum as rising commodity prices push inflation up.
“Long-term outlook for gold price points much higher than we might believe”
Daniel Pavilonis, senior commodity broker at RJO Futures, states that gold is once again recognized as an important store of value. The analyst says the market is much more than a safe-haven asset to hedge against geopolitical risks. Stating that “even if the tensions between Russia and the Western world begin to decrease, gold will continue to be well supported in the long run”, the analyst makes the following assessment:
The story of gold has now become a global story. Not just oil, but all commodity prices are rising and this will create massive inflation. Investors are turning to gold to protect their capital. In inflation, once the cat is out of the bag, it is very difficult to get it back without raising interest rates so much that it causes economic damage in the long run.
Daniel Pavilonis points out that escalating conflict has created short-term volatility underneath, and investors should look at the long-term picture. “Gold is a very good asset to help you overcome this inflationary pressure,” he said. The long-term outlook is that gold will continue to rise higher than we might believe, mostly due to inflation.
Ole Hansen: Gold orbit will stay in place for a while
Ole Hansen, head of commodities strategy at Saxo Bank, says he expects gold to remain in its current uptrend as commodity prices rise. He adds that he expects sanctions against Russia to remain in place for the foreseeable future, even if the military leaves Ukraine immediately.
Ole Hansen notes that even before Russia invaded its neighbor, commodity prices were in a strong uptrend. Along with the war, the analyst states that an increase in oil prices above $100 per barrel will threaten global economic growth and makes the following comment:
We look at fuel prices, which are killing growth. Hopefully we’ll see a de-escalation in Ukraine soon, but even if we do, the gold orbit will remain in place for a while.
“An important factor that makes gold attractive is its relative stability”
Ole Hansen says that another factor that makes gold attractive in the current environment is its relative stability. He adds that although prices have soared in recent weeks, he has not seen an unstable, parabolic move. “This conflict started in Ukraine, the price of gold increased by about 4%,” the analyst says.
As gold’s geopolitical premium declines, investors will begin to focus on inflation, says Adrian Day, head of wealth management. The analyst makes the following assessment:
We can see continued higher prices; After another high CPI that was almost overlooked in the middle of the war, higher oil and commodity prices will flow out of the system into higher CPI figures.
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