The gold market is expected to end June down by around $47, its worst month since February. The precious metal is reacting to central banks doubling down on hawkish rhetoric and ignoring Russia’s turmoil. Some analysts see geopolitics playing a more significant role in driving the gold price. After a volatile weekend, gold was trading just $5 higher on the day. Markets are still confused about how to digest the news from Russia, with Prigozhin stating that he had never intended to overthrow the government.
Gold is trading at $1922.25 per ounce at the time of writing, namely up by almost $2 versus the previous closing. The full impact of the situation in Russia remains uncertain, and a reaction could still come. The armed uprising by Yevgeny Prigozhin’s Wagner mercenary group against the Russian military dealt a heavy blow to President Putin and exposed cracks in the regime.
The risk tilts towards Russia devoting more resources to the war to appease militarist factions. Gold has rebounded following the dramatic developments in Russia, as investors seek the precious metal’s safe haven appeal. The geopolitical triggers’ permanent role in the gold space remains unclear.
If this proves to be the beginning of President Vladimir Putin’s totalitarian control on Russia, the uncertainty is likely to keep gold supported in the medium-term. Some analysts see the turmoil in Russia as lowering risk appetite and igniting the safe-haven gold trade. Gold bulls will want a close back above $1,938, while $1,900 an ounce remains an important psychological support level.
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