Trump’s Ukraine diplomacy and its ripple effect on precious metals markets

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, followed by meetings with Ukrainian President Volodymyr Zelenskyy and European leaders in Washington, investors are closely monitoring 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 produce 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 supported by this premium, and easing tensions could erode it, prompting investors to shift capital from safe-haven assets to riskier equities and bonds.Conversely, 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 even higher.In such a scenario, central banks—particularly 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 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, creating potential buying opportunities 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 the upcoming festive and wedding seasons, demand is expected to remain resilient, even at elevated price levels.

(The author, Hareesh V is the Head of Commodity Research at Geojit Investments Limited)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)