Macroeconomic Analysis
After the fall comes the recovery, well a recovery of sorts at least. Finally a glimmer of green for equities markets after days of punishing losses. Yet it shows the extent of the declines recorded both earlier this week and since Russia’s invasion of Ukraine more broadly, that today’s healthy gains across global indices are only trimming the weekly and monthly losses.
Where that optimism is originating from is difficult to understand as the situation in Ukraine remains woefully bleak with no sign of an easy end to the war.
The united front being shown by the US and its European allies is the sole source of hope that these ever more punishing sanctions, that now include a banning of Russian oil exports into the US and the UK, will force Russian President Vladimir Putin to agree on a peaceful end to the conflict in Ukraine, particularly as in the face of fierce Ukrainian resistance, his planned takeover is becoming much more protracted than he surely must have originally envisaged.
These severe financial sanctions will need to bring about a swift end to the war in Ukraine before they severely damage the tentative economic recovery that was in place prior to Russia’s invasion.
That glimmer of hope remains for now that the global economic fallout will be capped and the recovery can resume but the short-term impact of the sanctions with record-high energy and metals prices already damaging demand means that the window of opportunity is ever narrowing.
Gold Price Analysis
The rush to gold with huge trading volumes has pushed the price close to its all-time high but with equities having a rare positive session so far, gold has dropped back a fraction from these record levels.
However the ultimate safe-haven asset remains well above $2,000 an ounce, a threshold gold has only passed a few times in its extensive trading history to illustrate the flood of support it has benefited from.
While the war in Ukraine sadly shows no sign of coming to a swift conclusion, there remains every chance that gold can yet achieve its highest ever price.
In normal circumstances, tomorrow’s European Central Bank interest rate decision and US inflation figures would be the dominant focus of traders but given the geopolitical situation, these two macroeconomic features have been relegated to mere backdrops.
That said, signs that central banks are now plotting a less hawkish approach could be the nudge that gold needs to break fresh ground.
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Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
