Gold price forecast with Ukraine open to diplomatic talks with Russia

Gold price rose to its highest level since August 2020 at $2,070.88 on Tuesday. At that level, it was only about $5 shy of its all-time high of $2,076.64, which it hit at the peak of the coronavirus pandemic. Interestingly, the rallying recorded in recent weeks is comparable to the one observed at the height of COVID-19 crisis. In both cases, the surge in gold price was founded on its status as a safe haven and store of value.

Rallying eases

While the precious metal remains on an uptrend, it has pulled back from the multi-year high reached earlier in the week. This is a reaction to news on Ukraine’s willingness to reach a comprise in an effort to end the war that has been ongoing for about two weeks now.

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

On Wednesday, a top official in President Volodymyr Zelenskiy in the foreign policy docket asserted that Ukraine is open to discuss with Russia over its stipulated demands on neutrality. However, this is on condition that Russia makes security guarantees. Besides, the aide was keen on noting that even with the diplomatic talks, Ukraine is unwilling to surrender any part of its territory.

The positive news have improved the market sentiment; an aspect that has yielded a rebound in global stocks while lowering the demand for safe havens like gold and other precious metals. Indeed, other precious metals, which also bear the status of a safe haven, dropped from the multi-year highs hit at the beginning of the week.

After reaching its highest level in close to a year at $26.95, silver price pulled back to an intraday low of $25.32. Similarly, Palladium dropped from an all-time high of $3,411.64 per tonne on Monday to $2,919.20 as at the time of writing.

Bulls remain in control

The recorded decline is also as a result of the commodity markets getting into profit-taking mode after surging to multi-year highs earlier in the week. From this perspective, gold price is likely revive its rally in the ensuing sessions. In fact, it has already bounced back from its intraday low of $1,970.22 to $1,996.88 as at 10:50 a.m GMT.

In addition to the ongoing war between Russia and Ukraine, inflationary pressures continue to boost the precious metal. Conventionally, it is considered a hedge against inflation. Investors are now keen on the US CPI and jobless claims numbers scheduled for release in Thursday’s session.