Gold pushes back over the $1900 mark
World Gold Council finds gold holds gains once crisis fades from headlines

(USAGOLD – 2/28/2022) – Gold pushed back over the $1900 mark this morning as Russia’s invasion of Ukraine bogged down and whipsawed speculators returned to precious metals for safe-haven purposes. It is up $21 at $1912. Silver is up 16¢ at $24.48. Gold’s seesaw price performance since the invasion began raises an interesting question as to how much of gold’s rally over the past month has to do with geopolitics and how much of it has to do with inflation and the impact of future Fed policy. Equally important, will the gains stick once the conflict ends? The World Gold Council posted a short study over the weekend showing that gold has a long history of rising in response to major geopolitical events (listed below the chart) and, most importantly, holding those gains once the crisis fades from the headlines.

line chart showing the average performance of gold before and after various events
Chart courtesy of the World Gold Council • • • Click to enlarge

“[G]old has reacted positively to tail events linked to geopolitics,” writes Juan Artigas, WGC’s global head of research, “and, despite price volatility, tended to keep those gains in the months following the initial event. In addition, gold trades in a deep and highly liquid market, with collective volumes surpassing US$120bn a day on average and tight bid-ask spreads. All these, combined with the fact that bullion carries no credit risk, makes gold a sought-after safe haven asset.”

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