The price of gold has soared to its highest level since the height of the pandemic as investors flock to the safe-haven asset amid war in Europe.
Gold was punching above $2,000 on Monday morning as the war in Ukraine continues into its second week. The prices of gold and other precious metals have been rising steadily as the region becomes more entrenched in the conflict. Gold was trading at about $1,795 at the start of the month, representing an 11.4% increase.
“The severity of the war in Ukraine and the uncertainty around its future trajectory have fueled broad-based gold-buying from safe-haven seekers, pushing prices towards $2,000 per ounce,” said Carsten Menke, an analyst at Julius Baer. “A further escalation would likely lift prices further.”
The prices of silver and platinum have also risen since the conflict began, with platinum ballooning to $1,125 on Monday — about $100 more than its price before Russia began its invasion.
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The price of palladium hit an all-time high on Monday, reaching $3,440 before tumbling back down to just over $3,000, which is a massive increase from its $1,900 price point at the start of the year.
The price of palladium is largely being driven by fears of scarcity given that Russia is the world’s largest producer of the metal.
“Possible supply outages from Russia are still being priced in on the palladium market,” Commerzbank analysts said in a note. “As supply outages could not be offset elsewhere, the market risks sliding into a sizeable supply deficit.”
As gold and precious metal prices rose on Monday, U.S. stocks fell. The Dow Jones Industrial Average contracted by about 1.5%, or nearly 500 points, while the Nasdaq dropped by 1.7% and the S&P 500 tumbled 1.6%.
The Chicago Board Options Exchange Volatility Index, better known as the VIX, is intended to gauge fear in the markets. The index was up more than 5.6% on Monday after recently notching its highest level in more than a year amid the fear and uncertainty brewing in Europe.
Oil prices have also exploded as a result of the war. The national average price for a gallon of gasoline on Monday was $4.07, and West Texas Intermediate crude futures were at about $118, a major surge from the $90 level before the invasion.
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Russia and Ukraine are gearing up for a third round of peace talks. Moscow has additionally provided a list of demands that Ukraine must follow if it wants peace. Those demands include the cessation of Ukrainian military operations, acknowledgment of breakaway regions as independent republics, and changes to the Ukrainian Constitution.
