Abstract:

Gold has been associated with wealth and prosperity for many years but is primarily regarded as the global currency of the world and a universal component of an investment portfolio. Gold is treated as a safe haven against adverse price movements in the capital market and is used to diversify an investment portfolio. Although gold is widely considered to be a completely safe form of capital investment, significant fluctuations in its price have been observed over the years. Therefore, the aim of the study was to analyse the gold price in terms of the increase in geopolitical risk caused by the growing armed conflicts and the war in Ukraine. The period of analysis is 2020-2024, in order to examine the impact of several smaller armed conflicts on the gold price, (such as the armed conflict between Armenia and Azerbaijan in Nagorno-Karabakh and the armed conflicts in Africa and the Middle East in 2021), but mainly analysis the impact of the military conflict between Russia and Ukraine on the gold price. The study poses the following hypotheses:

H1. The gold price is sensitive to geopolitical risks caused by both military threats and military acts

H2. There is a positive relationship between gold price formation and geopolitical risk caused by military conflicts

H3. An increase in geopolitical risk from Russia, Ukraine and USA increases global gold prices

Geopolitical risk is a multifaceted issue and is subject to segmentation (political, social, economic, military situation, etc.), but in this article the focus is primarily on the risks associated with military crisis. This research is a preliminary study, indicating the direction and background for a broader analysis of gold price movements in the face of geopolitical risks