Geopolitics And Gold
Naeem Aslam | Jan 25, 2022 01:43AM ET
The surge in stock market volatility, as well as crises in Ukraine and the Middle East, have prompted investors to expand their exposure to precious metals, which is regarded as a safe haven commodity in times of uncertainty.
According to the most recent reports on Ukraine, the United States intends to send around 8,500 soldiers on high alert in order to reinforce NATO forces in the region, if needed. Russia, on the other hand, has denied all accusations that it plans to take over Ukraine.
That said, precious metals will most probably struggle to continue its price pace since interest rate rises seem certain in the coming months. When interest rates rise, so does the opportunity cost of owning gold, making it less tempting to investors. This will eventually result in sell-side pressure on gold, pushing its price down.
The chart below shows current gold price in its resistance zone. If it breaks above this zone, we are likely to see more higher highs.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.