As geopolitical tensions continue to shape global financial markets, U.S. President Donald Trump’s renewed diplomatic push to end the Russia-Ukraine war has sparked intense speculation about its impact on safe-haven assets like gold and silver. With Trump’s recent summit with Russian President Vladimir Putin in Alaska and subsequent meetings with Ukrainian President Zelenskyy and European leaders in Washington, investors are closely watching how these developments could reshape the trajectory of precious metals.
Trump’s Alaska summit with Putin on August 15, 2025, lasted three hours but failed to yield a formal ceasefire agreement. The follow-up meeting on August 18 at the White House brought together Zelenskyy and a coalition of European leaders. Their goal was to secure robust security guarantees for Ukraine and counter Trump’s push for a rapid peace deal that could compromise Ukraine’s territorial integrity.
The outcome of these talks remains uncertain, but the diplomatic momentum has already begun influencing investor sentiment in commodity markets.
Impact on bullion
Historically, gold and silver have served as safe-haven assets during periods of geopolitical instability. The prolonged Russia-Ukraine conflict has been a major driver of elevated gold prices over the past three years.
If Trump’s ceasefire initiative succeeds, the immediate effect could be a reduction in the geopolitical risk premium. Gold prices are currently carrying a risk premium due to geopolitical tensions. When geopolitical tensions ease, this premium could erode, prompting investors to shift capital from safe-haven assets to riskier equities and bonds.
On the flip side, if the ceasefire fails and hostilities escalate, gold and silver could surge to new highs. Gold has already tested levels above $3,400 per ounce in recent weeks amid ongoing global tensions. A prolonged conflict would likely fuel further safe-haven demand, potentially pushing prices towards new highs.
In such a scenario, central banks—especially in emerging markets—may accelerate gold purchases to hedge against currency volatility and inflation. Retail investors, too, would likely increase allocations to precious metals, reinforcing the bullish momentum.
Central banks have played a pivotal role in supporting gold prices. A recent World Gold Council survey found that 95% of central banks expect to increase their gold reserves over the next year. This sustained demand underscores gold’s enduring status as a hedge against economic and political uncertainty.
Looking ahead, Trump’s diplomatic overtures to end the Russia-Ukraine war represent a critical juncture for global markets. While a ceasefire could dampen safe-haven demand and trigger a correction in gold and silver prices, the broader landscape remains fraught with uncertainty. Tariff tensions, inflationary pressures, and central bank policies continue to support precious metals as strategic assets.
Investor strategy and outlook
For investors, the current situation presents a classic case of binary outcomes. If peace prevails, gold and silver may face short-term corrections, offering a buying opportunity for long-term holders. If conflict escalates, these metals could outperform most asset classes, reaffirming their role as crisis hedges.
Indian investors should also watch the rupee-dollar exchange rate closely, as it will play a pivotal role in determining local gold prices. With upcoming festive and wedding seasons, demand is expected to remain resilient, even at elevated price levels.
First published in The Economic Times