In the 24 hours since Russian troops began to invade Ukraine in a coordinated attack from land, sea and air, global financial markets have been rocked by intensive levels of volatility. In contrast, gold has gained dramatically to test £1,474 ($2,000) pricing levels yesterday (Thursday) just hours after news of the Kremlin’s military action broke.
Markets have swiftly tumbled in to the red, with the FTSE 100 closing 3.88% down. This represents a staggering £76.9 billion ($102.88 billion) loss. In France, the CAC 40 was 3.83% down by close of play on Thursday evening. Germany’s DAX slumped by 3.96% and in Russia, trading was temporarily halted as Moscow’s index saw a third of its value wiped out, with £149 billion ($200 billion) losses described as one of the worst in history by economists. Germany’s Deutsch Bank said the impact felt by international markets is “seismic”.
The rouble also fell to a record low against the US dollar, requiring Russia’s central bank to step in as nations lined up to announce stringent sanctions which saw billions of assets held by banks, businesses and oligarchs frozen from London to Washington and beyond.
It’s no secret that in times of economic and political instability, gold shines brightly through the turmoil. As a historic and well-established safe haven, it’s seeing incredible demand on the back of the flight to safety. It soared to 18-month high during Thursday’s session, hitting £1,477 ($1,976). This put gold within reach of it’s all-time high above £1,496 ($2,000), showing exactly how valuable an asset the yellow metal is, and how strongly it reacts to add value, when other markets, assets and currencies flounder.
Market strategist Peter Mooses says more price action is on the cards, and we could see gold again testing higher prices, as investors digest the impact of the sanctions imposed so far. He said, “We’ll see what Russia’s next move is. We should anticipate a lot of volatility, especially going into the weekend.”
