The gold market is starting the week on a slightly positive note, and while it may not be catching a major safe-haven bid after a 24-hour insurrection in Russia, analysts said that gold should remain a vital portfolio diversifier in times of heightened uncertainty.
Gold Market After Insurrection in Russia
The gold market remains under the critical psychological level at $1,950 an ounce after mercenaries with the Wagner Group, led by Yevgeny Prigozhin, launched an armed rebellion and marched to within 200 kilometers of Moscow during the weekend. August gold futures last traded at $1,936 an ounce, up 0.34% on the day.
The rebellion ended nearly as quickly as it started as Moscow made a deal with Prigozhin, exiling him to Belarus and offering amnesty to Wagner’s professional soldiers if they stood down.
Short-Term Selling Pressure and Long-Term Support
Jeffrey Christian, managing director of CPM Group, said with the attempted coup failing, gold prices in the next few days could see some short-term selling pressure as cooling geopolitical fears reduce the precious metal’s safe-haven allure. However, he added that long-term, the instability seen during the weekend should provide long-term support for the precious metal.
Geopolitical Volatility Expected to Rise
Michele Schneider, director of trading education and research at MarketGauge, said that the attempted coup in Russia shows just how fragile the world is. She added that she expects geopolitical volatility to rise as the decades-long globalization trend weakens.
Investing in Gold During Uncertainty
In this current environment, Schneider said that even if gold prices move lower, it is very short-sighted for traders to be bearish on gold and other raw commodities. She sees any short-term weakness in gold and silver as buying opportunities, and investors should pay attention to the physical gold market because that will reflect the geopolitical premium in the marketplace, as investors will want to have physical gold to protect their wealth.
