The price of spot gold rose above $2,000 on Tuesday, March 8 as safe-haven demand soared over the war claiming lives in Ukraine, a growing humanitarian crisis in Europe, and rising inflation.
Spot gold prices on Tuesday approached the record high of $2,072.50 reached in August 2020 and gold was trading at $2,014.10 as of this writing.
As the Russian invasion of Ukraine enters its third week with no end in sight, high anxiety is reflected in the marketplace. U.S. and European bans of Russian oil imports are exacerbating inflation. “This toxic cocktail poses a huge problem for central banks,” an analyst said.
Investors worry that the war will result in losses in other investments, Wall Street Journal reported. Surging commodity prices and supply-chain disruptions are expected to drive inflation.
“They are seeking the kind of protection that investors believe gold can give them against the geopolitical turbulence and against macroeconomic issues, as well, especially inflation,” said George Milling-Stanley, chief gold strategist at State Street Global Advisors. “All those things put together, we could be in for a good year.”
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
Meanwhile, Bitcoin, which has been touted by fans as “digital gold,” a safe haven, and a hedge against inflation, fell below $40,000 on March 10 in what market observers described as a “classic Bart (Simpson)” pattern.
“More than $200 million of daily crypto liquidations accompany an about-turn for Bitcoin price action,” Cointelegraph reported. “Bitcoin (BTC) reversed in classic fashion on March 10 after bulls failed once again to hold higher levels.”
“The correlation between crypto and stocks has been high over the last few months on both inflation-related macro news and the Russia-Ukraine geopolitical situation,” Chris Dick, a quantitative trader at crypto market maker B2C2, told CNBC in February. “This correlation shows that Bitcoin is firmly behaving like a risk asset at the moment—not the safe haven it was touted to be a few years ago.”
Photo: Gold bars in a vault at the U.S. Mint in West Point, N.Y., July 22, 2014 (AP Photo/Mike Groll, File)