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Will Gold See New Record Highs?

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EDITOR'S NOTE: The inflationary surge was enough to drive gold prices higher, considering how the “barbarous relic” always seems to transform itself into a practical safe haven every time purchasing power goes south. The Russia-Ukraine war added an unexpected boost to gold’s rise, not only because of the geopolitical risks and uncertainty that military conflicts can bring but also because of the fact that gold, among other commodities, is produced at great volume in Russia. And with the West’s sanctions against the nation, cutting it off from the western world, so too are its commodity exports like gold, palladium, nickel, wheat, and crude oil among others. What might this mean for the price of gold in the months to come? What might it mean for inflation, in general, in the months to come? Perhaps, gold record highs are just a start of a much larger supercycle.

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Chart: Axios Visuals

With inflation surging, gold — the traditional hedge on rising prices — has flirted with new record highs.

The big picture: The yellow metal is traditionally viewed as a safe haven during times of crisis, especially by investors in emerging markets.

  • Russia is also one of the world's largest gold producers, and recent sanctions on the country have made buyers jittery about supply — leading some to stock up.

Worth noting: The crippling sanctions highlight the risks central banks face in holding their reserves in dollars and other foreign currencies.

What they're saying: "We expect Central Bank gold demand to reach its historical high level as [central banks] globally have both strong diversification and geopolitical reasons to shift reserves into gold," Goldman Sachs analysts wrote in a note this week.

Originally published on Axios.

 

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