Gold's record rally in 2024 hit resistance around $2,791/ounce, leading to a pullback to $2,540/ounce and $2,637/ounce on December 2.
Gold prices are forecast to hit a new record high above $2,800 an ounce, up more than 6% from current levels, before Christmas.
“A war would push gold to record highs. In the current environment, $2,800 by Christmas is not out of the question,” said Matthew Jones, precious metals analyst at Solomon Global.
“The ongoing conflict between Russia and Ukraine has become one of the most intense and geopolitically significant confrontations of the 21st century,” Mr. Jones noted.
Western nations, led by the United States and its NATO allies, have provided significant military aid to Ukraine. The West is tacitly approving Ukraine’s use of long-range missiles such as ATACMS or Storm Shadow to target strategic locations inside Russia.
Russia has repeatedly warned that attacks on its territory could provoke serious responses, including targeting Western supply lines or infrastructure in NATO countries, Mr. Jones stressed. Such retaliation could trigger a direct confrontation between NATO and Russia, escalating the conflict beyond Ukraine’s borders.
“A war between Russia, the US and NATO could push gold prices to record highs due to a number of interconnected economic and geopolitical factors,” the expert noted.
Mr. Jones further explained that gold is considered a safe-haven asset during times of geopolitical uncertainty, war or economic turmoil. Investors often flock to gold to protect their assets, leading to increased demand and higher prices.
“Governments at war often spend heavily on their military, leading to increased national debt and money printing. This can weaken fiat currencies like the US dollar or euro, making gold more attractive as a store of value.”
He also stressed that a war between Russia, the US and NATO "could push up prices of essential commodities, especially oil and gas, as both Russia and NATO countries play an important role in the global energy market. Higher energy prices would spur inflation, which would tend to boost gold as an inflation hedge.
Another common development during times of geopolitical uncertainty is for central banks to increase their gold reserves to diversify their holdings and reduce their exposure to volatile foreign currencies. Increased demand from central banks will contribute to higher gold prices, according to Mr. Jones.
Gold prices have tended to rise during past conflicts, such as World War II, the Cold War and the Gulf War. Modern wars tend to have a broader economic impact due to the interconnectedness of global markets, which can further amplify demand for gold.
