Gold Tops $350 Again as Iraq Geopolitics Roil Precious Metals Market
Дмитро Ковальський | Dmytro Kovalskyi
3 min read
European gold prices on Thursday, February 20, climbed back above the psychologically important $350 per troy ounce mark for the first time this week. The rise was fueled by escalating tensions surrounding Iraq. Experts do not rule out that the price could jump to $355-360 by the end of the week.
After three days of trading below the $350 level, the gold market made a sharp upward move. The morning fix in London was set at $351.10 per ounce, 1.5% above the previous evening’s figure. In Zurich, by 14:00 Moscow time, gold was trading in the range of $351.00-352.00 per ounce.
Main Driver: Not Economics, but Politics
Analysts unanimously link the current rise to the deteriorating situation around Iraq. Investors traditionally view gold as a “safe haven” during periods of geopolitical instability and increased risk. Besides the Iraq factor, positive momentum came from Asia and America: demand increased on the Tokyo Commodity Exchange, and futures prices also rose on the New York Commodity Exchange (COMEX).
“The rise in gold prices in Europe, experts note, was caused by escalating tensions around Iraq.”
Near-Term Forecast: Two Scenarios Depending on Iraq
Experts cited by the publication have prepared two clear scenarios that show how dependent the gold market is now on political news:
- Escalation Scenario: In case of further crisis escalation, gold prices could rise to $355-360 per ounce by the end of the week.
- De-escalation Scenario: If a peaceful resolution to the Iraq issue is found, prices could plummet to $325-326 per ounce.
The $340 per ounce level is seen as a key “pivot point”: in case of a peaceful outcome, it will become a resistance level, and in the medium term, a support level.
What Does This Mean for Ukrainian Investors and Business?
Although Ukraine is not a major player in the gold market, its dynamics are important for several reasons:
- Indicator of Global Risks. Rising gold prices are a clear signal to Ukrainian exporters and companies operating in international markets about increasing uncertainty. This can affect exchange rates, the cost of credit, and investment sentiment.
- Savings Protection. For affluent Ukrainians and financial institutions considering gold as part of an investment portfolio, the current volatility opens up opportunities for short-term trading. For international investors observing Ukraine, this highlights the sensitivity of regional markets to global risk sentiment, which can spill over into other asset classes.
- Impact on the Hryvnia. A strong US dollar, which often (but not always) accompanies rising gold prices during crises, can put pressure on the hryvnia exchange rate.
In general, gold price quotations exert their influence on the Ukrainian economy, and thus on the life of each of us.
Conclusions: Market in News-Waiting Mode
The current situation is a classic example of how geopolitics drives a commodity market. Gold has ceased to be just a metal and has turned into a barometer of investors’ fears of a possible war.
Further price movement will depend almost entirely on news headlines from Washington and Baghdad. Ukrainian businessmen and investors sensitive to global trends should watch this “golden thermometer” of world tension closely — its readings in the coming days could be very telling.
* Exchange rate as of 20.02.2003: ~1 USD ≈ 5.35 UAH. The calculation of the ounce price in hryvnias is averaged and is not a financial recommendation.
