The gold price and war in Ukraine are closely related. The current gold price has reached a high of 2000 per troy once.
The increase in the price of gold has started since the beginning of 2022 in January, the gold price is still in 1780, but as of the time of writing, the price of gold has reached 1993 with a high of 2000.
This increase is very interesting to analyze in more depth because the impact of war on gold prices is very influential.
- 1 Gold spike amid Russia invasion
- 2 Why is Gold price soaring amid war?
- 3 Gold safe haven investment
- 4 Gold technical analysis
- 5 Gold price forecast
- 6 Conclusion
Gold spike amid Russia invasion
Russia began to invade Ukraine on February 24, 2022. Since then gold price and war impact on gold has started to soar. From the low price at that time 1877 soared to 1974 in just a short time. However, prices do not go up in one direction. Profit-taking brought the gold price back down to 1902, the close price on that day.
The next day the gold price continued to rise and reached the high level of 2000 which is the current resistance. This position is still possible to penetrate if Russia has not stopped its attacks on Ukraine.
Why is Gold price soaring amid war?
War is a condition that many human beings do not expect. As a result of the war in addition to disrupting security. It will also have a chain impact on many things. Supply chains stalled by war pose security vulnerabilities.
This condition can cause the economic balance to be disrupted because the impact of hampered supply is inflation.
Responding to the panic is one of the reasons why gold prices soared. Gold has historically been an asset that is resistant to inflation. Therefore, gold is one of the safe-haven assets in uncertain conditions.
Panic buying when Russia announced its invasion of Ukraine has caused gold prices to soar. But there is a possibility that the spike will occur due to speculators trying to take advantage of rumors about the Russian invasion of Ukraine.
Because it did not last long at the price position in 1974, the price of gold soon fell again to the closing price of 1902.
Gold safe haven investment
Safe-haven assets become a balancing portfolio when economic conditions are bad. When in the long term it is estimated that there will be a downturn in the economy, capital owners will tend to pile assets that are negatively correlated with these conditions.
Gold is one of the safe havens because its intrinsic value is not influenced by interest rates like currencies are flat. History has proven the value of gold which tends to protect assets from high inflation.
Gold vs BTC amid Ukraine war
Although currently, Bitcoin appears which some people say is digital gold, if you compare the price of gold and Bitcoin in the midst of the Ukraine war.
The value of gold shines brighter than Bitcoin. Bitcoin is still a risky digital asset due to its volatility.
From the BTC price chart above, we can conclude that in the midst of the Ukraine war and future economic uncertainty. BTC’s price is still very hard to reach its highest peak. Instead, the price of BTC tends to decrease.
Gold safe haven hedge
Besides being a safe haven, gold is also known as a hedging asset. This is also one of the commodity and stock investment portfolios as a balance between risk and profit potential.
There are several reasons why gold is used as hedging, including:
- Gold acts as an important tangible asset when a financial crisis takes place.
- Gold has consistent purchasing power from year to year.
- The value of gold does not depend on the policy of the authorities. So changes in interest rates and the like do not need to be too worried.
- Free from the risk of a banking crisis, because gold is not affected at all by the world banking system.
As a hedge asset, the price of gold has made history, reaching its highest peak in 2011 and again in 2020 amid the global pandemic-hit situation. Gold is still the prima donna asset of investors as a hedge asset.
Not only large-scale investors, but central banks also use gold as a reserve to hedge currency. This is because the value of gold is not affected by bank conditions. If the currency floods the market too much, inflation will be high. Meanwhile, gold is a hedge against inflation.
Gold safe haven history
In the 2008 crisis, gold still has a stable value and tends to increase, from year to year until 2011 the price of gold was very bright and formed the highest price reaching 1920.
The economic recession still made gold a safe haven. Since 2020 when the pandemic hit the world. gold also still acts as a safe haven with its value tending to increase.
In 2022, gold again showed its radiance amid the war in Ukraine, gold prices jumped dramatically and reached a new record price in 2000. The bullish trend amid uncertain global geopolitical conditions could bring gold to form new highs this year.
From the picture above, after gold formed its highest in 2011, the price then dropped until 2016, the year when the global economy did not experience turmoil.
But the price of gold has started to creep up since 2018 until four years on in 2022 gold has formed new highs since 2011.
Gold technical analysis
Gold prices have contracted since Russia’s invasion of Ukraine on February 24, 2022. From the daily timeframe window. Gold prices have surged past all-time highs with upside potential still open.
Currently, the gold price is above MA 9 and experiencing increased volatility which can be seen from the two Bollinger band lines that are expanding.
The picture above is the price of gold on the daily timeframe, we can see the RSI indicator shows the level of 99, which means the price has entered the overbought zone according to the indicator.
Meanwhile, the stochastic indicator shows level 94 which has also shown an overbought level according to the indicator.
What is the next?
In trading theory, when the price has reached overbought there is a possibility that a trend reversal will occur. In this case, allow the price of gold to go down first.
But not only when the oscillator indicator shows the overbought zone then the price immediately reversals. One important thing is that market participants are unique, a set of transactions may cause prices to fall, but on the other hand, there are groups that counter transactions so there is a demand and supply battle.
In this condition, if the buyer is more dominant, the indicator may give a false signal. This does not mean that the indicator does not work, but rather the condition of the response of market participants to the signal from the indicator.
1-hour timeframe is quite good for short-term analysis, where traders try to find swing highs and swing lows to determine potential buy and sell.
Gold price in the current 1-hour timeframe shows the price is consolidating. After yesterday the price dropped to the 1967 level, the price again tried to rise to the 1999 level. However, the price got rejected in this area and the price dropped back to 1980.
Next, the gold price will try to break the 1999 level, if the zone of this price level is broken, then the target at 2049 will act as resistance.
We see the price of gold is in the middle of the middle band at the moment, indicating the price is consolidating, with the indicator lines flat.
The RSI level shows 53 indications that the uptrend is still ongoing based on the indicators. Meanwhile Stochastic shows level 66 also indicates an uptrend but in a downward swing session.
Gold price forecast
Each expert in predicting the price of gold may differ from one another. Some predict the soaring prices amid the Ukraine war will only have a short-term impact.
Here forecasters predict many traders who face losses after buying action due to panic buying of gold. However, there are also those who predict that gold prices are still likely to rise in the long term. Global economic uncertainty is the main reason for this forecast.
In 2022, by Poh Kong Holdings Bhd (PKHB), a Malaysian company predicts an increase in demand for gold with another easing of policies so that mobility will approach normal. It is hoped that it will trigger an increase in the demand for gold.
Joni Teves, an analyst from UBS predicts the soaring gold price will not last long, further by the end of 2022 it is estimated to fall in the range of 1800.
The World Gold Council predicts that Gold in 2022 will face the same dynamics as last year. Although the price of gold will react to the real exchange rate as a result of global central banks tightening monetary policy to control inflation.
The increase in interest rates is not an obstacle for gold to become a hedge in the future in long term.
Forecasting site Longforecast predicts the price of gold at the end of 2023 in the range of 2280-2520. This analysis is based on a technical algorithm with a certain formula and produces numbers in the forecast.
While Coinpriceforecast predicts gold price in 2023 can reach $2,370.
Wallet investors predict the price of gold in the next year or in 2023 to reach $2127,880. Gold is an acceptable long-term year as a profitable asset.
Gold price 2024 by Coinpriceforecast predicts the gold price will start at $2,370, then rise to $2,490 in the first six months and end in 2024 at $2,783.
The Longforecast predicts that the price of gold in 2024 will be full of up and down dynamics, which at the end of the year will be in the price range of 2972-3309.
In an interview by David Lin Kitco news, Patrick Karim of Northstar & Badcharts. The interview was posted on November 9, 2021. Karim said the price of gold could rise by $4700 in 2024.
Richard Kiyosaki author of Rich Dad, Poor Dad, sees the price of gold in the next five years can reach between 2000-5000.
Jeff Clark, the Senior Analyst, GoldSilver, suggested holding gold since 2021 last year, and now the price has actually gone up modestly.
Coinpriceforecast forecasts gold in 2025 in the middle of the year in the range of $2,998 and at the end of the year reaching $3,116.
Longforecast predicts gold price in 2025 in the range of 2949-3259 with a close at the end of the year at 3104.
Wallet investors predict that the price of gold in the next five years or 2025 will reach a price of $2915,240 by describing gold as an acceptable investment.
Gold price and war in Ukraine still gaining investor confidence as a safe haven, global turmoil that is still full of uncertainty due to the war and the covid pandemic has opened the eyes of investors to buy gold as a safe haven and hedge.
Gold prices may still shine even more, although some analysts believe the current surge is only temporary and will end.
Note: this article is for informational purposes only and does not constitute investment advice. Forex, CFD, Crypto are risky assets, each investor is responsible for his/her investment.
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