Capitalize on the high volatility! Open a Trading Account Today and join the markets!
People have traditionally looked to gold as a safe-haven asset. This is because gold has long been regarded as a reliable store of value due to its physical properties as the world’s first form of currency. It is true that the price of gold remains constant over time while the price of everything else rises. It is broadly available for trading but has a limited supply, making it rare to be considered valuable. Unlike some metals, it is non-corrosive, making it long-lasting.
In times of uncertainty, traders like to park their assets in the safest place, and gold happens to provide that. Compared to a stock investment, where even the largest blue-chip companies can fail and face bankruptcy, an investment in gold often appears to be less risky.
In addition, a safe-haven investment helps traders and investors diversify their portfolios, allowing them to withstand massive volatility. The heightened volatility in the market is usually due to some short-term events. More recently, this volatility has been due to fear about global economic growth due to the adverse influence of covid. On a day like today, it is due to the attack by Russia on Ukraine. Traders are worried about how this will influence oil prices, providing a tailwind to the ongoing higher inflation situation. Gold is also considered a hedge against inflation, and given that inflation is likely to remain at current levels for some time, traders are currently favouring gold.
It is widely expected that the US, along with its allies, will sanction Russia. Putting any sanctions on Russia could have a detrimental influence on global growth. Hence, today we see the gold price rising as traders like to park their money which is considered safe.
See a trading opportunity? Open an account now!