As we reported on cryptoify.news, the gold market once again disappointed many investors after seeing an intraday surge of around $100 on Thursday.
“Investors should look at gold from a long-term perspective”
While Russian soldiers invaded Ukraine, gold prices rose to the highest level of the last 1.5 years with 1,976.50 dollars. Market analyst Neils Christensen warns investors and traders of the risks of gold trading as a geopolitical safe-haven. According to the analyst, the problem with this gold game is that the momentum is unsustainable if geopolitical uncertainty does not increase. “We have seen this scenario many times in the last ten years, and gold has fallen further from where it started,” said the analyst.
You should not chase gold in a single geopolitical conflict. However, this does not mean that it is not an effective safe-haven asset.
According to some analysts, investors should look at gold from a long-term perspective rather than focusing on daily volatility. Neils Christensen states that gold’s role as a safe asset is not over yet. “You just have to ask yourself what you need to protect,” says Neils Christensen. Regarding the effects of the invasion of Ukraine, the analyst comments:
Apart from the humanitarian tragedy unfolding in Ukraine, this conflict will significantly affect the global economy. Ukraine is the third largest wheat exporter. It is also an important player in the energy market. This new conflict threatens global food and energy supply chains, which could further drive inflation.
“Gold is one of the last pillars of security in the global financial market”
Analysts had pointed out that the threat of rising inflation dragged the gold market into a new uptrend long before Russia began its war games. According to the analyst, this is an insidious threat that continues to grow.
On Friday, US consumer prices rose to 5.2%, the highest level since 1983, with the core PCE, the Federal Reserve’s preferred gauge of inflation. This is not new information, but it shows that rising prices are not going anywhere. We don’t know how this will end.
“Gold is one of the last pillars of security in the global financial market,” says Neils Christensen, who says it has no relation to equities and has no counterparty risk, making it an important diversification tool. According to the analyst, although the daily price action of gold can be frustrating, it still remains an important asset for investors.