Gold Prices Volatile Amid Russian Mutiny

Wednesday, 28 June 2023 at 1:50 pm CST | 

Gold prices volatile amid Russian mutiny 

Gold prices are volatile following the failed attempt at mutiny by Russian oligarch Yevgeny Prigozhin. This weekend, mercenaries from the Wagner Group marched on Moscow, marking one of the most significant rebellion threats faced by longtime Russian President Vladmir Putin. Putin himself told security forces in the country that they “virtually stopped a civil war.”

Adding to the chaos is the abruptness of the armed uprising. One anonymous source told CNN that the uprising “happened very quickly.” The revolt might have long-term consequences, according to some experts familiar with the situation. Most notably, the Associated Press reports that the Wagner Group mercenaries were “some of the best forces” and have been pulled from the Ukrainian battlefield, a move that spells trouble for the already tumultuous Russian war effort. 

The sheer breadth of Prigozhin’s unsuccessful march on Moscow also poses a threat to public perception of Russian security. Wagner Group mercenaries were able to shoot down helicopters and a military plane on their way to the Russian capital. While Russia’s Defense Ministry failed to comment on the insurrection, Russian studies expert Michael Kofman remarked that Wagner’s devastation of Russian forces demonstrates clear “damage to Putin’s regime.” 

Important to emphasize that we still don't know much about how this ends, what the agreement was, and whether it will stick. It remains to be seen what will happen to Prigozhin and Wagner. For now the damage to Putin's regime is arguably the clearer part of this saga. https://t.co/BRGRmUZNZF

— Michael Kofman (@KofmanMichael) June 26, 2023

Unpredictable Consequences

Despite the clear threat to Russian stability, analysts are divided on the potential outcomes of the Wagner revolt. The New Arab journalist Karim Traboulsi calls attempts to predict the outcome of the volatile and abrupt insurrection “dishonest.” 

But as Traboulsi points out, the situation in Russia seems to closely mirror another conflict: the Sudanese civil war. Wagner’s own forces are involved in the brutal infighting between Sudan’s national army and the RSF military. Comparisons are complicated by the fact that Russia is an armed nuclear power with a volatile leader. 

Prigozhin was allowed to leave Russia and has since arrived in Belarus as part of a quick, quiet deal with Putin. In exchange, the Wagner Group surrendered its weapons to Russia’s military; Putin had previously admitted to paying Wagner’s leader over 86 billion rubles in wages over 2022. 

Despite what seems to be a reprieve in the bloodshed, both the future of the Wagner Group and the status of the rebellion remain uncertain. With analysts undivided on what the next political moves might be for Putin and his allies, it is clear that Wagner’s armed march will have lasting consequences on market confidence in Russian-produced assets – including gold. 

Gold Prices Respond to Russian Insecurity

Russia’s main financial lender reacted to the mutiny, downplaying concerns that the Russian market might take a major dive. Responding to reporters’ questions about the ruble hitting a new 15-month low, the company’s CFO (Dmitry Pyanov) cited no “significant impacts of [the] event” on the bank’s confidence in the strength of their Russian loans. 

While lenders work to put out the fire of hawkish investment sentiments, movements in the spot price of gold early this morning suggest that the market is reacting to Russia’s political insecurity. 

Bullion prices crashed last week but have recovered slightly during early morning today. Gold futures (GC=F) hiked by .07% in the opening hours of the market. Kitco analyst Jim Wyckoff told Reuters that the reaction was “modest” but suggested “safe haven demand” from investors over the weekend. 

Russia remains the second biggest producer of gold in the world. Kinesis Money market analyst Rupert Rowling produced a report and remarked that the “long-lasting” effects of the failed rebellion on gold price action is tough to predict. 

Hero Bullion will be carefully monitoring the situation to bring readers the latest news on gold price movements following Wagner’s attempted insurrection.

Gold Spot Price Recorrects Amid Uncertain Market

Following a brief hike attributed by some analysts to Russian political chaos, the spot price of gold fell once again early this morning. Prices for the precious metal hit a one-month low. Reuters reports that investor attention has turned to Jerome Powell, Federal Reserve Chair, as he prepares to speak on what some investors interpret as positive consumer confidence in the U.S. economy and the strength of the dollar. 

While Russia’s ongoing political turmoil is likely to breed uncertain yields in the gold market, the positive outlook on U.S. economics is a bad sign for the price of gold. German banking organization Commerzbank wrote in a memo that a key indicator of the Russian mutiny’s effect on assets is whether it has an “effect on global monetary policy.” 

Gold’s price has recorrected from the turmoil in Russia, which caused spot to climb on June 27. The uncertain future of the conflict – combined with growing confidence in the U.S. dollar – results in volatile precious metals market conditions.