Gold rates will flareup due to Ukraine conflict’s impact on the global econ

Paris/Washington: The European thinktank OECD has warned that the Russia-Ukraine war will jolt the global economy. There has been a significant increase in the rates for food grain, oil and other raw materials and inflation has flared up. The European think tanks warned that this would impact the global economy. This will result in a massive increase in the rates for Gold. The traditional secured investment and financial institution Goldman Sachs predicted that the Gold rates would increase to $2,500 per ounce by the end of this year.

It has been more than three weeks since Russia launched the attack on Ukraine. The United States, Europe and allies have imposed harsh sanctions against the Russian economy since the war. Significant effects of the war and the sanctions are becoming evident in the global economy. Russia is a leading producer in the oil, food grain and minerals sectors. Whereas Ukraine and Russia together are referred to as the ‘Bread Basket’ of the world. These countries are leading producers of Wheat, Cereals, Corn and Sunflower. The rates for these items report a record increase and there is a significant collapse in the global stock markets.

In just three months since the beginning of 2022, there has been an increase of 18% in the Gold rates. Factors like an increase in the Gold ETF prices, Gold demand in the post-Corona phase and purchase by central banks of various countries have been responsible for this increase. The financial institution Goldman Sachs has said that the Gold ETF price increase will majorly contribute to the Gold rate increase. The US financial institution claimed that increasing inflation in the United States and announcements by the Federal Reserve also would be responsible for the Gold rate increase.

A few days ago, the Gold rate crossed the $2,000 per ounce mark. Although the rates are currently under $2,000 per ounce, analysts at Goldman Sachs pointed out that a significant rate increase is expected. The analysts at the US financial institute have predicted that the Gold rates will reach $2,500 per ounce level by the turn of the year.

Moreover, along with Gold, rates for food grain, metals and other raw materials also are increasing rapidly. Inflation is flaring up in many countries given this increase and its effects are becoming visible in the economy. The war has disrupted the global supply chain. Repercussions of this are being felt in the international trade. The European group OECD has predicted that these factors will be responsible for slowing down the pace of the global economy. The group has warned in its report that the GDP in the global economy will decrease by 1.09%. A few days ago, US experts and analysts expressed concerns that the Russia-Ukraine war could trigger a global recession.