The gold market seems to complete June as the worst month since February. Yellow Metal suffered a depreciation of around $ 47 this month. The price of gold reacts to the fact that central banks double their hawk rhetoric and ignore the turmoil in Russia. However, some analysts think that geopolitics plays a more important role in directing the gold price.
The gold market is confused!
Kriptokoin.comAs you followed, things are confused in Russia. Wagner mercenary soldiers attempted a rebellion that failed under the leadership of their leaders Yevgeny Prigozhin. Following this turbulent weekend, gold was traded with an increase of only 5 dollars during the day. Prigozhin said in a statement on Monday that he never intended to overthrow the government. Therefore, the markets are still confused about how to digest the news from Russia. Nevertheless, it is not known where Prigozhin is.
The gold market did not see a great move from the increasing geopolitical uncertainty. In addition, the Yellow Metal was under global pressure because they continued the tightening cycle of central banks. August -term Comex gold contracts opened June at $ 1,981.30. However, it declined later and was last traded for $ 1,933,60. The full impact of the situation in Russia remains uncertain. And it is still possible for a reaction. Capital Economics Senior developing markets economist Liam Peach interprets the latest developments as follows:
Yevgeny Prigozhin’s Wagner -mercenary group of soldiers at the weekend against the Russian army armed uprising against President Putin’e a heavy blow. It also revealed the cracks in the regime. At this point, there are many unknowns about how things will end. Although a fully developed war economy does not seem possible, a greater war effort may threaten the unstable balance that can maintain macroeconomic stability in Russia.
The decline factors for gold price are more dominant
In response to the events in Russia, he stopped gold sales and found support for now. According to Kinesis Money Market Analyst Rupert Rowling, gold re -revived with the search for the safe port charm of precious metal after the dramatic developments in Russia at the weekend. In this context, Rowling makes the following assessment for the impact of developments on the price of gold:
The decrease factors for gold outweighed than rise factors. Therefore, just a few days after seeing a stable decline period, uncertainty about how the Ukrainian war would end, and the possibility of a civil war within Russia sharply reversed the fortune of gold.
Rowling says that geopolitical triggers will play a permanent role in the golden field. “If this is the beginning of the end for the totalitarian control over Russia, the uncertainty can provide support for gold in the medium term with investors wanting to keep some risk away from the table,” he says.
New regime: ‘lower risk and higher shelter’
Some analysts state that the turmoil in Russia reduces the general risk appetite. They also claim that gold fires safe port operations. Nicky Shiels, President of the MKS PAMP Metal Strategy, one of them, makes the following statement:
This Russian coup made the war even more complex. A more unstable Russia (even if it is weakened) is not necessarily relaxing. Russia moved its tactical nuclear weapons to Belarus. Also, even if Russia loses control of its nuclear arsenal, it is not great. There are more geopolitical uncertainty. For this reason, a floor was fired for the ‘lower risk / higher shelter’ regime.
According to Shiels, if there is a hope that the war in Ukraine will be solved somehow, Gold will ignore it. In this context, the Analyst, “Putin is in a more vulnerable position. Also, Russia’s ability to fight in the nearby term in Ukraine has decreased significantly. For now, markets will be on alert. Because this is a really active picture,” he adds.
Investors, A He has focused on the discourse of inflation for the price of LTIN
According to ING’s Global Strategy Manager Chris Turner, this silent reaction is partly because there is no clarity of what will happen next. In addition, the fact that financial markets are accustomed to increasing geopolitical uncertainty due to Russia’s actions play a role here. Instead, the price of gold is largely focused on inflation discourse. It also looks at what the central banks around the world do. Turner continues to explain his views as follows:
Both central bankers and governments kept their money and finance policies too loose for a very long time, respectively. That’s why they’re under criticism. These will be the most important issue of the ECB annual symposium in Sintra this week. Many of the Presidents of the G7 Central Bank are participating in this symposium. They will probably give a hawk message similar to what Jerome Powell, President of the Federal Reserve last week.
Important levels to be followed for six price
In terms of price levels, $ 1,900 continues to be a significant level of psychological support. Chris Weston of Pepperstone’s Research Manager draws attention to the following levels for gold:
My preference for gold is to give stop-loss orders below $ 1,912. I aim to play in and under this figure in the bear momentum. Gold bulls will want a closing above $ 1,938.
