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The price of an ounce, the traditional unit of measurement for gold, is close to 1,900 dollars, its highest level for eight months. Main factors of this price increase: the Ukrainian crisis and inflation.
The recent worsening of the Russian-Ukrainian crisis worries investors. Joe Biden ruled on Thursday February 17 “ very high the threat of a Russian invasion of Ukraine. If this scenario occurs, the world would not be immune to a stock market crash, according to François Faure, head of aucoffre.com, a platform for buying and selling precious metals. ” Faced with such uncertainties, investors do not want to take risks, he explains.They therefore buy gold considered as a safe haven. »
The yellow metal indeed tends to retain its value in turbulent times. This was the case in 2019, during the Sino-American tensions which resulted in a sharp increase in its price.
7.5% price increase in the United States, a record
In addition to the Ukrainian crisis, inflation, which appears to be less transitory than expected, is another factor that has contributed to gold’s appreciation in recent weeks. In the United States, the rise in prices reached 7.5% in January, unheard of for forty years. With rising inflation, savings depreciate. Consequences, investors and even households buy gold, which automatically boosts the price of the yellow metal.
Today the following question arises: how far will this rise in gold prices go? Everything depends on the outcome of the conflict in Eastern Europe. If in the next few weeks, the crisis subsides, then the price of gold might decline. The improvement in the health situation in the world will also play in favor of a fall in prices. Investors will sell gold to buy riskier but more profitable assets.
Finally, the announcement in the United States of a hike in the Federal Reserve’s key rates should strengthen the dollar, bring down inflation and thus make gold less attractive.