Ukraine crisis offers gold a chance to shine
Russia's threats to Ukraine are pushing the price of gold higher. But investors are also worried that US interest-rate rises could go too far and spark a recession.

When things get really scary, investors don’t buy bitcoin, they buy gold, says Karen Maley in the Australian Financial Review. Last year was disappointing for gold, as inflation fears boost cryptocurrencies, dubbed “digital gold” by some, at the expense of the physical kind. Yet “the threat of an imminent European war” has pushed gold up 5% this month to $1,900/oz, an eight-month high. Meanwhile, bitcoin has fallen 20% so far this year. Gold has got an additional boost from “stronger physical demand”. Consumption in China, the world’s largest gold consumer, rose by more than a third last year amid a strong economic recovery from Covid-19.
Precious-metal mutual and exchange traded funds enjoyed five consecutive weeks of net inflows through 16 February, says Hardika Singh in The Wall Street Journal. A sign of strong investor interest, that is the longest streak since August 2020, when gold hit an all-time high of $2,067/oz.
It’s not just geopolitics that is pushing gold higher, says Neil Hume in the Financial Times. Investors are growing worried that upcoming hikes in US interest rates – needed to fight inflation – could go too far and tip the world’s biggest economy into recession. “There is an increasing sense that the Fed is significantly running behind the curve,” independent gold analyst Ross Norman tells the FT. “They might have to move quite aggressively and… therefore the chances of a policy error are getting increasingly large.”
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If that happens then stocks will suffer, while gold could be a safe haven. “We would expect gold [ETF] inflows to accelerate as investors partly shift out of equities into gold,” says Mikhail Sprogis of Goldman Sachs, who thinks the price could reach new highs in the next few months.
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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
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