It’s an ill wind that blows nobody any good and if you are heavily invested in gold, today is a good day for your portfolio.
Unless you are invested in Russian mining companies but we’ll get to them in a minute.
Gold bullion for March delivery was trading at around US$1,962 an ounce in lunchtime trading, having risen as high as US$1,975 in the morning trading session – a level last seen two years ago.
Even with the price slightly off the top, the yellow metal is sporting a gain of more than US$50, or 2.6%, proving once again it is the go-to investment in times of global uncertainty.
The “uncertainty du jour” is Russia’s invasion of Ukraine, which has sparked a flurry of market commentary pieces awash with the phrase “risk-off” or worse still, the pleonastic “safe haven”.
“Gold has been an obvious choice for investors of late amid heightened geopolitical risks concerning Ukraine, a struggling global stock market and soaring inflation. Inflation is also helping to keep real bond yields in the negative territory, making the non-interest-bearing gold and silver attractive on a relative basis for yield-seekers,” said Fawad Razaqzada at ThinkMarkets.
Gold’s breakout had already started several days ago in anticipation of a potential Russian invasion, Razaqzada noted.
“With several key levels broken, there is not much in the way of resistance until just shy of $1960, the high from 2021, followed by the psychologically-important $2,000 level. The all-time high comes in at $2,075, hit in 2020. Key support is at around the $1900-$1920 range, which was previously resistance,” he added.
Meanwhile, Bitcoin, which according to some was supplanting gold as the haven investment for the risk-averse, has slumped 6.5% to US$35,132.
“[I] think we are finding out which of the two is the real haven,” quipped Neil Wilson at Markets.com.
On equity markets, precious metals miner Fresnillo PLC (LSE:FRES) is one of only five FTSE 100 stocks making progress today; it is up 8.3% at 745.4p.
Diversified miner Anglo American PLC (LSE:AAL), up 1.5% at 3,585p, is another going well, having released its results for 2021 today.
READ Anglo American reports record earnings, special dividend
Sitting at the wrong end of the Footsie leader-board are Polymetal International PLC (LSE:POLY), down 37%, and steel-maker Evraz PLC (LSE:EVR), down 31%.
“Under normal circumstances, all gold and silver miners would move up by the same or a greater amount than the commodity price. The postcodes of Polymetal’s assets meant it did not hitch a ride with the metal. In fact, it slumped 27% due to its primary focus on Russia. That’s nothing compared to Russia’s main stock market index RTS which dived by an alarming 49%,” observed AJ Bell’s Russ Mould.