This morning, after a Russian attack, the Zaporizhzhia nuclear power plant, which is the largest in Europe, caught fire. Fear has reached a climax, causing the price of gold to soar again.
On Thursday, Russian troops captured Kherson, located in southern Ukraine, and continued to advance towards Zaporizhzhia. Early on Friday morning, disturbing news came from the region: a local nuclear power plant was on fire.
The fire at the Zaporizhzhia nuclear power plant was caused by shelling by Russian forces who were trying to take control of the facility.
Recall that earlier Russia had already seized the inactive Chernobyl station, located about 100 km north of Kyiv.
Unlike the Chernobyl nuclear power plant, the Zaporizhzhia station is an important strategic facility. It is the largest in Europe and generates approximately 20% of the total volume of all Ukrainian electricity.
The news of the fire at the nuclear power plant raised great concerns about its safety. The threat of a second Chernobyl quickly sowed panic in the stock markets and increased the demand for safe-haven assets.
This morning, gold rose sharply by 0.6% to $1,948.60. However, later, when comments from the Ukrainian authorities about the real situation at the nuclear power plant appeared, the quotes also plummeted.
Ukraine informed the International Atomic Energy Agency that the fire did not affect the main equipment. It was also noted that the radiation background is not disturbed.
The severity of the incident was also assessed by US Secretary of Energy Jennifer Granholm. She assured that all reactors at the Zaporizhzhia NPP are reliably protected and will be safely shut down in an emergency.
Despite the fact that the level of anxiety about the emergency at the nuclear power plant has already decreased, gold still maintains a confident upward trend. Now bullion is aiming to end the current week with an increase.
According to preliminary estimates, since Monday, the yellow asset has risen in price by more than 2%. This is the best weekly increase in the precious metal since May last year.
Geopolitics continues to be the key pricing factor in the gold market. Yesterday, waiting for the outcome of Russian-Ukrainian negotiations, the cost of bullion rose to $1,935.90. The difference with the previous trade, when the quotes fell by 1.1%, amounted to 0.7%.
Investors foresaw that the meeting of the two sides would not lead to a de-escalation of the conflict, and they were right. It seems that there is no point in hoping for a ceasefire anytime soon. The military operation will drag on for a long time, as a result of which the world economy may face a severe crisis.
Markets are already feeling the economic impact of Russia's invasion of Ukraine. Oil prices are rising, fueling fears of accelerating inflation.
Wanting to protect their savings during a period of great uncertainty, many traders get rid of risky financial instruments and buy protective assets.
According to analyst Peter Grosskopf, gold currently has the biggest potential. The expert advises investors to ignore the daily price fluctuations that have been observed in recent days and focus on the larger upward trend of the precious metal.
Grosskopf expects that interest in gold will continue to grow, as there will be a lot of volatility in the stock markets. This is not about a major stock crash. In an environment where both geopolitical and inflationary risks are huge, the usual correction will be enough to scare traders and increase their interest in the precious metal.
