Since ancient times, gold has played the role of a safe haven in times of war and crisis. Of course, the conflict between Russia and Ukraine is no exception, and people from all over the world have recently poured into the gold market.
The conflict between Russia and Ukraine has led to a surge in the prices of everything from oil and natural gas to wheat and metals, raising concerns about inflation and threatening global economic growth. That prompted retail investors from Vienna to Singapore to New York to buy relatively safe gold, which soared to $2070.44 an ounce, close to the highs set during the epidemic.
The demand continues unabated.
Gold prices have soared nearly 10% since the start of the year, which is good news for gold traders like Philoro Edelmetalle GmbH founder Rudolf Brenner. The rush to buy gold is likely to continue and shows no sign of abating.
"when the crisis in Ukraine began, we received a large number of orders and sales reached three times the normal level," Brenner said. People buy everything. "
A similar situation has occurred at gold dealers around the world. Gene Furman, chief executive of Empire Gold Buyers in New York, points out that 30 per cent of his clients want to buy gold bars rather than cash.
Singapore Silver Bullion Pte Ltd. Sales of gold and silver rose 235% in the first week after the conflict between Russia and Ukraine, and demand has been growing since then, according to founder Gregor Gregersen.
"investors are considering the worst-case scenario of the Russian-Ukrainian crisis and are finding it wise to buy physical safe havens in security jurisdictions such as Singapore," Gregersen said.
Before demand soared, purchases of physical metals were already very strong, especially in western countries. According to the World Gold Council (World Gold Council), demand for gold bars and coins reached 1124 tons in 2021, the highest level in nearly a decade. This helps to support prices when institutional investors invest less.
The premium of physical gold is higher.
The current pursuit of physical gold is causing physical gold, which is most favored by retail investors and already with a high premium, to become more "out of control", indicating the scarcity of physical gold. To buy an ounce of gold bars, buyers may have to pay $100 more than the spot price.
Stephen Flood, chief executive of gold brokerage firm Goldcore, says the spot gold premium has risen by about 25% and is expected to rise further. In his view, the main driver is concerns about Russian financial sanctions, which have "politicized and weaponized" the payment system.
