GOLD prices advanced to an eight-month high, rising above $1 870 (R28 360) early yesterday, as an imminent Russian invasion of Ukraine continued to drive investors away from riskier assets, in favour of the safe-haven yellow metal.
The crisis in eastern Europe has weighed in on the markets, extending a global sell-off fuelled by fears that Russia is about to invade Ukraine.
German Chancellor Olaf Scholz was due for talks in Moscow yesterday, in search of a diplomatic solution to avoid a war in Ukraine.
Nato chief Jens Stoltenberg also said that indications that Russia was willing to pursue diplomacy over the Ukraine crisis were positive, though there was no evidence yet of Moscow pulling back troops from the border.
However, the price of gold had softened to $1 850 per ounce by 5pm, as the West and Russia have signalled tentative hopes of an easing in the tense stand-off.
ActivTrades senior analyst Ricardo Evangelista said investors were abandoning riskier assets and seeking the safety of the precious metal, as the brinkmanship between Russia and the West continues, with diplomatic efforts to solve the stand-off so far failing to yield any results.
“Should Russia’s invasion of Ukraine materialise, the geopolitical risk would be compounded by worsening economic prospects, with sharp rises in energy prices and diminished confidence among economic agents, a scenario likely to intensify investors’ flight to safe-haven assets, creating scope for further gold gains,” he said.
“However, such gains will be capped by a strengthening dollar, due to the inverted correlation between the two assets, as the greenback is likely to remain supported by the Fed’s hawkish resolve to control inflation.”
Meanwhile, South African stocks rebounded as the JSE All Share Index closed up 0.12 percent to 75 853 index points yesterday, following a 0.8 percent decline on Monday.
The JSE recovery was led by banks and financials amid signs of easing geopolitical tensions.
BUSINESS REPORT ONLINE