Why the price of gold does not affect the global tensions?

Why the price of gold does not affect the global tensions?

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Why the price of gold does not affect the global tensions?

The price of gold is stuck in a narrow range above $ 1,300 an ounce, and is trying to continue to grow, regardless of geopolitical tensions.Yellow metal could not “find the strength, which is usually associated with rising fear,” analysts say, despite the fact that United States aircraft bombed Iraq and NATO on Monday warned of a “high probability” of the Russian invasion of the territory of Ukraine. In fact, gold assets owned by exchange-traded funds, accounted for at least this year.

“In fact, long-term ups and downs of the price of gold reflects the growing concern in politics, cost of money, or the prospects of other assets,” – said Adrian Ash, head of research at Bullion Vault. Then why did the price of gold has not changed on the background of today’s geopolitical conflicts?

As noted by Ash, a third of investors in gold and silver believe that monetary policy will affect the value of the precious metals in the second half of 2014, more than geopolitical factors.

“The famous peak gold price of $ 850 per ounce in 1980, came when the Soviet Union invaded Afghanistan, and coincided with the crisis in Iran related to the seizure of American hostages in Tehran. However, while the speculators who trade futures and options on gold “move” prices, higher interest rates on the background of acute events, such changes will not be saved for a long time, “- he says.

Andrew Wilkinson, senior market analyst at Interactive Brokers, says weak signs of growth in demand for the precious metal, despite the geopolitical crisis.

“Gold is not able to find the strength, which is usually associated with rising fear. Taking into account that only 55 million ounces are owned by publicly traded funds, the size of gold assets approaching lows this year, “- said Wilkinson.

“Almost is not observed acceleration of buying gold, while geopolitical tensions in the spotlight. When the dimensions of gold assets owned by the funds were the same minimum, in 2009, gold was traded at $ 1,000 an ounce, “- he says.

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