Despite imminent interest rate turnaround, gold price rises like it hasn’t in a long time

Already since the low of August 2021, the gold price is again in an upward trend, which was interrupted by fluctuations again and again, but currently the gold price is higher than it has been for a long time.

The main reason for this is likely to be the Ukraine crisis. Ongoing tensions and the still uncertain geopolitical situation are driving investors into supposedly safe assets, proving once again that for many investors gold is considered a safe haven in times of crisis.

Gold price reaches eight-month high

At the end of the week, the price of gold rose at times above 1900 U.S. dollars per troy ounce. The last time there was such a high price was in June of last year. In August 2021, the gold price had even reached a low of 1680 U.S. dollars per troy ounce. Since then, an upward trend has been visible again, but this has been subject to enormous fluctuations.

The fact that the yellow precious metal was able to reach an eight-month high right now is perhaps surprising at first glance in view of the impending interest rate turnaround. But the main reason for the price increase is likely to be the Ukraine crisis.

Ongoing tensions and continued threat of war in the middle of Europe

The ongoing tense situation and the threat of war in Ukraine have been unsettling investors for weeks. Although there were initial signals of détente last week, both NATO and the U.S. government, as well as other Western governments, nevertheless remained skeptical.

Whether Russia is actually withdrawing troops from the Ukrainian border area has not yet been confirmed, and on Friday Kremlin leader Putin announced a maneuver to test strategic nuclear weapons and Russia called for the withdrawal of all U.S. soldiers from Eastern and Central Europe.

The flight to safe assets

All this doesn’t exactly sound like relaxation for investors either. For some weeks now, financial experts have been observing an increased demand for so-called “safe assets”. These include government bonds and currencies such as the U.S. dollar or the Swiss franc, and traditionally also gold.

For commodities expert Daniel Briesemann of Commerzbank, the investors’ actions are therefore hardly surprising. However, he sees the unclear and constantly fluctuating news situation regarding the Ukraine crisis as the main reason for the currently so strong demand for gold.

However, whether the trend towards gold and, above all, the high gold price will continue depends not only on the developments in Ukraine. Further developments in the US interest rate turnaround and the further development of the US dollar also play a major role in this.

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