Gold puts investors on edge amid Russia-Ukraine conflict

GOLD MAINTAINED A FIRM SPOT BUT CLOSED THE WEEK AT A LOWER VALUA TION AFTER SOAR ING to an 18-month high the previous day at $1,973.96 per ounce, underpinned by Russia’s invasion of Ukraine, which triggered the precious metal’s position as a safe haven asset amid geopolitical conflicts.

Spot gold gained 0.3 percent to $1,908.53 per ounce to record a fourth consecutive weekly gain. US gold futures, however, shed 0.8 percent at $1,910.5 per ounce.

According to analysts, reports of Russian forces moving toward the Ukrainian capital of Kyiv to inflict more pressure on the Ukrainian government forced markets to adopt a cautious stance as the yellow metal spent the first half of the day in a relatively tight range above $1,900.

In another development, reports of Russia willing to send a delegation to Minsk for talks with Ukraine raised optimism for a diplomatic end to the war, inflicting a bearish knock on the precious metal forcing it to retreat from its highest level since September 2020 at $1,974 a tonne.

With investors likely to stay focused on geopolitical headlines, analysts predict that gold is likely to face additional selling pressure should Russia reaffirm its intention to look for a diplomatic solution and refrain from the Ukraine invasion.

On the other hand, an extended military conflict between Russia and Ukraine, as well as additional sanctions from the west is expected to take the precious metal on a bullish ride.

Craig Erlam, senior market analyst at OANDA posited that gold prices will rally once more “if the West brings something with more of a punch to the table” .

“There’s plenty of appetite for gold as there remains enormous uncertainty. There’s still a long way to go with this and it will take time for investors to reduce their safe haven exposure,” Erlam added.

For other precious metals, Spot silver fell 0.1 percent to $24.18 per ounce, while a volatile session saw platinum slip 0.6 percent to $1,050.76 per ounce, after rallying to $1,126.18 per ounce the previous day.