Gold News

Gold Price Rallies from 3-Month Lows as Russia's 'Mutiny' Spurs Geopolitical Fears

GOLD PRICES rose Monday from 3-month lows as the Dollar softened, crude oil rose, and the Russian Ruble dropped to its lowest since the Kremlin began its invasion of Ukraine in early 2022 after the Wagner mercenary army's aborted 'mutiny' over the weekend, writes Atsuko Whitehouse at BullionVault.
 
Gold priced in the US Dollar rose 0.6% to $1932 per ounce after falling 1.9% last week to the lowest since mid-March as the Federal Reserve vowed to keep raising interest rate despite the bond market signalling recession ahead.
 
"This new geopolitical set of headlines has helped to give gold some minor buoyancy," said the latest daily gold-price and precious metals note from Rhona O'Connell at brokerage Stone X Group Inc.
 
The Dollar index – a measure of the US currency's value versus its major peers – fell 0.2% after recording the first weekly gain in 4 weeks.
 
Meanwhile, the Russian Ruble hit its lowest in nearly 15 months against the dollar, weakening by almost 3% on Monday before paring some losses.
 
Russia's currency plunged to a record low when the country was first hit with massive economic sanctions after it began a new offensive in Ukraine in February 2022, aiming to add the rest of the country to its annexation of Crimea.
 
Chart of Russian Ruble FX rate to the Dollar. Source: Investing.com
 
Russian mercenaries made a short-lived 'mutiny' on Saturday, seizing the southern city of Rostov and advancing on Moscow demanding the removal of Russian military commanders in charge of the war in Ukraine.
 
The private Wagner army then withdrew after striking a deal guaranteeing the passage of their leader, Yevgeny Prigozhin, to Belarus with immunity from reprisals and Wagner fighters who took part in the uprising are to be pardoned, and those who took no part are to be absorbed by the regular army.
 
"If it had happened on a weekday, gold would have been wildly volatile," said Bruce Ikemizu, chief director of Japan Bullion Market Association in the latest note. 
 
"This probably made it harder for gold to sell off lower again."
 
"The uprising showed real cracks in Vladimir Putin's government," said Antony Blinken, the US secretary of state on Saturday, "and may offer Ukraine a crucial advantage" as it conducts a counteroffensive against Russia's invading forces.
 
"This putsch...has revealed cracks and fragilities that now cannot be unseen," said Mizuho economist Vishnu Varathan.
 
"It undeniably amplifies global geopolitical risks."
 
European stocks fell on Monday, with Europe's region-wide Stoxx 600 dropping another 0.2%, extending losses after the index last Friday registered its worst week since March.  
 
London's FTSE 100 lost 0.4%, while Germany's Dax dropped 0.1% after a closely watched survey showed that business confidence in Europe's largest economy declined for the second successive month in June.
 
Crude oil – of which Russia remains a major supplier to the world – climbed 1.3% in early Asian trade before paring to 0.8% gain for Brent crude futures and 0.6% for US West Texas Intermediate crude.
 
Prices for silver, primarily an industrial metal, which finds nearly 60% of its annual demand from industrial uses, rose 1.5% to $22.87 per ounce, after recording the worst week in over 8 months by falling 7.2% last week.
 
Platinum, which finds two-thirds of its demand from industrial uses, led by auto-catalysts, also rose 0.9% to $928 per ounce, while the price of palladium – of which Russia is the No.1 miner – jumped 2% to $1314 per ounce.
 
Monday has been declared a non-working day in the Russian capital to allow time for things to settle.

 

Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.

See all articles by Atsuko Whitehouse here.

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