Gold prices experienced heavy volatility in reaction to unfolding geopolitical events. The tone-shifting, key late summer/early fall moment was a meeting between Ukrainian President Volodymyr Zelensky and European leaders convened at Trump’s White House. At the start of the trading session, gold (XAUUSD) was trading at $3,336. Speculation regarding possible peace agreements led investors to push down the price, which fell to a low of $3,323. It then recovered to reach a new all-time high of $3,358 later in the day.
The recent turbulence in gold prices is tightly connected to the climate leaders’ haggling that continues to unfold before the world. According to analysts, a peace settlement between warring factions will bring a rapid decline in gold prices. They expect it to at least test its support level of $3,298. Traditionally, investors consider gold a risk asset. During early, peaceful and stable times, they usually take their money out of it. Exhibit A of this behavior has been the crash of emerging markets over the last six months.
Unsurprisingly, market participants are on tenterhooks over the wait for a possible peace deal. The recently concluded Alaska Summit asterisk between former President Donald Trump and Russian President Vladimir Putin has done nothing to quell this storm. These high-profile meetings with TAA participants have far-reaching consequences. They call into question the viability of peace agreements and affect investor sentiment towards gold.
As an asset that has historically reacted positively to market turmoil, gold’s price action is a direct reflection of underlying economic activity. Diplomatic discussions have formed enough uncertainty in the market. Consequently, under this instability, gold price has seen a volatile trading day, with continued ups and downs. As the price hovers just above important support levels, investors are on the lookout for bullish catalysts to support future price appreciation.