The Impact of Geopolitical Turmoil on Precious Metals Prices: How Wars and Economic Sanctions Drive Market Volatility.
Geopolitical turmoil, such as wars and economic sanctions, can have significant impacts on global markets and, in turn, on physical precious metals prices. Wars tend to drive up the price of gold significantly, as increased government spending and lower consumer confidence coincide with conflicts.
The effects of wars on gold can last for a long time, as investors need to factor in possible inflation from a tightening labor market after the war ends. Economic sanctions can disrupt markets not targeted by sanctions, which can drive up commodity prices by reducing supply. The impact of economic sanctions largely depends on the size of the sanctioned economy, with far-reaching sanctions on larger economies leading to sharp price increases in the short to medium term. It is important to consider geopolitical events when making investment decisions in precious metals, but also important to learn how to spot panic buying or selling and not buy until the price stabilizes or a more identifiable price trend emerges.