With the ongoing Russian-Ukrainian crisis, you might be wondering if it is a good time to invest in gold right now. After all, gold has long been considered a safe haven for investments among many, especially during times of turmoil. Despite that, you might need to take a step back from an all-out gold investment. Read on to see if you should invest in gold during this Ukraine crisis today.
Have the Prices of Gold Increased?
Before you make the decision to invest in gold or not, you need to understand the trend of gold prices. Concerns over the Russia-Ukraine war and growing inflationary pressures boosted safe-haven demand for gold. In particular, the cost of gold surged to a one-month high on 18 April 2022, just shy of $2,000 per ounce. On that day at 2:09 p.m. ET, spot gold had risen 0.1 percent to $1,976.56 per ounce, having achieved a high of $1,998.10 earlier in the day. Gold futures in the United States closed at $1,986.4, up 0.6 percent. This, in comparison to March’s spot gold prices, has increased by approximately 4.30%. Therefore, suggesting a well-defined upward trend for gold prices.
In fact, according to a senior analyst of HDFC Securities, Tapan Patel mentioned that despite the Fed's policy move, the geopolitical risk premium associated with the Russia-Ukraine war, as well as global inflation concerns, may continue to drive gold purchasing. Similarly, Lead of Commodities and Currencies CapitalVia Global Research, Kshitij Purohit also said that the synergistic effect of both geopolitical uncertainty and current inflationary pressures has enhanced gold's impact on the global economy. In fact, he continues to say that the price of gold has since reached its highest level since August 2020.
Should You Invest in Gold?
With all the predictions of increasing gold prices, does this mean you should invest in gold during the Ukraine crisis? Well, the answer is not so clear-cut as a simple yes or no. Some are recommending investors invest in gold and hold onto their investments for the long term. For instance, Goldman Sachs predicts that Russia will probably sell its gold stockpile and return to being a significant gold buyer once the Ruble stabilizes. And with Russia's past experience with foreign reserves, it is also feasible that other countries will want to keep a bigger proportion of their reserves in gold in the long term as well. And this means that he is predicting that it is better for investors to invest in gold now, and only sell it in the long term when that eventually happens. On the other hand, some are saying it is not necessarily a good idea to invest in gold now. This is because, despite the rising price and demand for gold, it could actually negatively impact the demand for gold. At the same time, the price of gold may also be unable to increase any further in the near future once real yields reach a positive level. This can also be attributed to the Federal Reserve of the United States' projection of intensifying its policy tightening at its next meeting, with a hike of 50 basis points predicted in May and June.