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The Impact of the Russia-Ukraine War on Gold Prices

Gold's Expected Rebound

The world’s perception of Russia has shifted dramatically due to its activities in Ukraine. Nobody expected a full-scale strike by a powerful country in a non-aggressive region like Ukraine. The United States and Europe are also grappling with the scenario. Sanctions were the first measure taken to stop this attack, although they contributed little to preventing Russia’s invasion. Since 2014, Russia has been properly prepared for such penalties.

If Vladimir Putin assumed that the Russian army could easily enter Ukraine and accomplish its objectives, clearly, they were deluded. Nonetheless, there is one clear frontrunner in the war: gold!

This signifies that individuals might want to consider investing in precious metals as the military campaign has impacted gold rates. Russia may be unable to recover, but the ruble has remained unharmed. To give you a clearer understanding, let’s talk about how gold is still the winner.

Can Gold Beat the Sanctions?

The West’s lawmakers expected their sanctions to have an imprint on the Russian economy, diminishing Putin’s control. Many people believed Russia had minimal things to offer America besides petroleum products. This suggests that sanctioning Russian businesses and cutting off Russian banks from the West would have insignificant consequences.

Russia is the top supplier of fertilizer, and rising fertilizer prices could have an impact on agricultural rates. Most farmers might also have to stop growing crops since they can’t get fertilizer, and the prices can make the food industry unprofitable.

Putin chose to startle the global financial system by demanding Rubles as reimbursement for natural resources and petroleum supplies. The international economic supply network also cut ties with Russian banks.

The Russian Central Bank took serious measures as they fixed the Ruble to precious metals. The bank stated that it would buy gold for 5,000 rubles per gram. Each ounce of gold can cost approximately 155,505 rubles as per the exchange rates of only $1,850 per gram.

Aftereffects Of The War

Higher inflation fears triggered an influx of hedges against inflation during the nonstop economic uncertainty that pushed the international gold market value to $2,000 per ounce on 6th March 2022. As a result, fears of cutbacks due to the Russian-Ukrainian war and limited supply have kept prices high.

Furthermore, sanctions against Russia, a prominent gold miner, are projected to halt the mining process for a while. The MCX gold price rose dramatically by 4.66% to 52,559 US dollars. Moreover, the price of ‘Spot Gold’ soared from 4.30% to $1,970.35 per ounce. 

According to Kshitij Purohit, “As investors examine the sociopolitical and financial ramifications of Russia’s attack of Ukraine, it is pointed out that gold has climbed over $2,000 an ounce after the war.” 

Gold bars in minted condition

“Gold prices are expected to increase significantly for a variety of factors. Individuals have been rushing to safety commodities as a byproduct of the Ukraine issue, which continues to cause a lot of fear.” From the above factors, it’s clear that gold prices have and will continue to rise in the future.

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If you’re looking for a professional and reliable precious metal storage company in the USA, Orion Metal Exchange is your best bet. We’re among the few companies in Los Angeles that offer specialized consultations concerning precious metals IRA. Head over to our web page to check out our precious metal investment solutions or get in touch with our expert crew.  

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