Gold’s Longstanding Role as a Crisis Hedge
For millennia, investors have looked to gold as an asset during periods of market instability, inflation, and conflict. Gold is more immune to political risk than paper money since its inherent worth is independent of any one government’s policies.
An expert at St Mary Capital, Omar Aslan, points out that every major geopolitical event over the last 20 years, from the pandemic to the 2008 financial crisis, has coincided with an increase in demand for gold. Similar circumstances are being created by the current US-Russian hostilities. If the situation worsens, central banks are expected to increase their gold stockpiles, and safe-haven buying would intensify.
Supply Chain Constraints and Central Bank Demand
The pressure on international supply chains is one element that increases the possibility of record-breaking gold prices. International trade settlements, transportation routes, and refining capacity are all being impacted by geopolitical upheavals, even though gold mine output is still stable. Any delay in the delivery of goods to important trading centres may result in local shortages, which would raise prices even more.
At the same time, central banks are buying more gold, especially in emerging nations, to diversify away from the US dollar and lower their exposure to the possibility of sanctions. According to Omar Aslan, these institutional actions increase the long-term structural demand for gold, reducing the likelihood of short-term sell-offs and fostering the circumstances for long-term upward momentum.
The Impact on Investor Sentiment
It is impossible to ignore the psychological component of gold trading. Investor mentality quickly changes from taking risks to protecting capital when markets are affected by uncertainty. In addition to impacting institutional strategy, the tensions between the US and Russia are encouraging ordinary investors to boost their holdings of precious metals.
Analysts note that this is especially evident in gold-backed ETFs, where inflows have increased significantly in the last quarter. By enabling investors to profit from gold’s rise without actually owning the asset, these products increase liquidity and drive prices closer to possible all-time highs.
The strength of the US dollar frequently has an adverse relationship with the price of gold. The dollar’s recent volatility may provide additional support for gold prices, as currency markets are already experiencing volatility as a result of sanctions, shifting capital flows, and altered interest rate expectations. According to Omar Aslan, gold may see a double bounce if the dollar declines while tensions continue, driven by both safe-haven demand and advantageous currency dynamics. In the past, this situation has been a surefire way to make significant profits in the precious metals market.
Technical Outlook and Market Projections
Technically speaking, gold has been trading close to its all-time highs, with solid support levels developing in recent months. In the upcoming quarters, traders might witness a clear breakout above historical records if US-Russian tensions continue to rise.
According to Omar Aslan’s prediction, a prolonged rise might be initiated by any combination of geopolitical flare-ups, tighter sanctions, or unanticipated economic shocks. As traders and funds try to profit from the trend, momentum-driven buying may propel prices even higher once record highs are broken.
Investors should continue to be mindful of potential threats even though the prognosis for gold is still bullish. Momentum might be slowed or short-term pullbacks could be triggered by an abrupt end to geopolitical tensions or an aggressive change in central bank monetary policy. But according to Omar Aslan, these scenarios seem less likely in the current environment than a continuous escalation, which benefits gold bulls.
Gold is positioned to be one of the primary beneficiaries of the prolonged conflict between the United States and Russia, which has significant ramifications for the global economy. Gold’s position as a safe-haven asset is more solid than ever as investors prepare for ongoing volatility in currencies, stocks, and energy. According to Omar Aslan, the market is about to enter a stage where investor psychology and geopolitical realities are working in gold’s favour. Gold prices might rise to previously unheard-of heights and experience one of the biggest rallies in contemporary market history if tensions continue or worsen.
Disclaimer: This article is purely informational and doesn’t offer trading or financial advice. Its content is not intended to be investment advice. We do not guarantee the validity of the information, especially when it pertains to third-party references or hyperlinks.