The gold price scaled above $2600 per ounce for the first time in 15 months this week amid rising global geopolitical tensions.
According to the World Gold Council (WGC), gold hit $2617 per ounce in Australian dollar terms on Tuesday, a figure not reached since early November 2020 when the commodity had been trading above $2600 per ounce for the better part of four months.
At that time, analysts put the price rise down to COVID-19, with a weakening of the United States dollar compounded by the deployment of economic stimulus packages in the face of an unprecedented pandemic.
Today, the price jump comes as tensions between Russia and Ukraine intensified, with the former threatening to invade Ukraine, parking thousands of troops at the Ukrainian border in the process.
While Russian President Vladimir Putin has indicated the two countries could come to a diplomatic solution, US President Joe Biden, who has supported Ukraine through the conflict, said on Tuesday that “an invasion remains distinctly possible”.
Likely in response to increased tensions between Russia and Ukraine, shares in Evolution Mining rose 7.9 per cent on Monday. Regis Resources also rose 7.61 per cent and Silver Lake Resources rose 7.1 per cent.
Investors often retreat to gold as a safe haven during times of uncertainty as it is not at risk of becoming worthless, unlike fiat currencies. Gold is considered a store of value and cannot be printed like money, while it is not impacted by government interest rate decisions.
WGC global chief executive officer David Tait told Singapore finance radio station, moneyfm893, he was confident in gold’s performance for 2022.
“(2022 will) be interesting but the big story, especially later in 2021 was the recovery of consumer demand. Jewellery, bars and coin demand was up across pretty much all, or most, of the major markets,” Tait said.
“As economies continue to recover from the worst of COVID, we expect economic growth and a lot of pent-up consumer demand to remain and be robust in 2022.”
Needless to say, despite the undulations gold experienced during 2021, the commodity will always be there when investors need it.