The Crimean Bridge is under attack again! After negotiations, conflict resurfaces, Russian senior officials say ‘comprehensive retaliation’

1、 Escalation of conflict: Ukrainian drone night attack on Crimean bridge, Russian senior officials respond strongly

On the early morning of June 4th, the Ukrainian military launched a new round of attacks on the Crimean Bridge using an improved TB-2 drone, destroying two sections of the bridge deck and causing a disruption to road traffic. This is the third major attack on the bridge since its first attack in October 2022, and the Ukrainian Ministry of Defense stated that the operation aims to “cut off the Russian military’s logistics supply lines”. Russian Defense Minister Shoigu gave a televised speech on the same day, accusing Ukraine of “terrorist acts” and warning of “indiscriminate retaliation” against the Kiev decision-making center. Russian Federal Security Council Vice Chairman Medvedev also bluntly stated that “there is no possibility of negotiation in the conflict, and we will fight until Ukraine is completely demilitarized”.

1. Attack details and strategic impact

The Ukrainian military claimed to have used six modified drones, three of which carried 500 kilograms of high explosive bombs, to break through the Russian “Armor-S” air defense system and accurately hit the highway section south of the bridge.

The Crimean Bridge, as a key passage connecting mainland Russia and the Crimean Peninsula, carries over 2000 trucks per day and handles 85% of the transportation of Russian frontline supplies. The attack caused a delay of at least 72 hours in the logistics supply of the Russian Donbass cluster.

Russia subsequently launched missile attacks on Dnipropetrovsk Oblast, destroying three railway bridges and one military arsenal, exacerbating the vicious cycle of “bombing to keep bombing” between Russia and Ukraine.

2. International reactions and sanctions dynamics

On June 4, European Commission President von der Leyen announced to accelerate the 18th round of sanctions against Russia, add export bans on 20 Russian military industrial enterprises, and expand the personal assets freeze list. The US State Department condemned Russia’s “excessive military response” but refused to commit to providing Ukraine with long-range missile systems, raising concerns in the market about the risk of further conflict spillover.

2、 Gold safe haven demand surges, with the support level of $3330 becoming the focus of long short competition

The sudden escalation of geopolitical conflicts has driven a surge in safe haven buying of gold. On the morning of June 4th in the Asian market, spot gold prices rose to $3370 per ounce today, recovering some of the losses from the previous trading day. The rise in geopolitical and economic risks has boosted its safe haven appeal.

The game between the rebound of the US dollar and geopolitical risks

Although the US dollar index rebounded to 99.10 due to the hawkish comments of the Federal Reserve, the “shortage of safe assets” caused by the escalation of the Russia-Ukraine conflict outweighed the strong impact of the US dollar. The World Gold Council (WGC) report states that when the global geopolitical risk index exceeds 120 points, the positive correlation between gold and the US dollar will increase to 0.6 (usually -0.3). Currently, the index has reached 135 points, a new high since March 2022.

3、 Risk Warning

If Russia launches a retaliatory nuclear deterrence exercise, it may trigger panic buying in the market, and gold may break through the psychological barrier of $3400. If Ukraine announces acceptance of the terms of the peace talks, caution should be exercised against a short-term pullback of gold to $3300, and it is recommended to keep the position within 10%.

Note: The Crimean Bridge attack is still ongoing and this article does not constitute investment advice.