The second round of direct negotiations between Russia and Ukraine has ended, with territorial disputes deadlocked and a surge in demand for gold as a safe haven

1、 Negotiation breakdown: prisoner of war exchange yields only one outcome, territorial dispute unresolved

The second round of direct negotiations between Russia and Ukraine, which was originally planned to restart on June 3, was actually held secretly in Istanbul, Türkiye, on June 2, but it broke down after only one hour. The two sides have reached limited consensus on humanitarian issues such as prisoner of war exchange and body transfer, but have fallen into fundamental opposition on core issues such as territorial sovereignty and ceasefire conditions.

1. Limited Consensus: A Number Game of Prisoners of War and Corpse

Both sides agree to exchange captured soldiers under the age of 25 (each with more than 1000 soldiers) and establish a medical committee to coordinate the transfer of severely injured personnel.

Russia has unilaterally promised to transfer the bodies of 6000 fallen soldiers to Ukraine and implement a partial ceasefire on the front line for 2-3 days to clear the battlefield. Ukraine has submitted a list of kidnapped children, and Russia has stated that it will verify the information, but has not promised specific actions.

2. Core disagreement: Zero sum game of territory and sovereignty

Russia demands that Ukraine recognize the “legal ownership” of the five regions of Crimea, Donetsk, Luhansk, Zaporizhzhia, and Kherson, and permanently renounce joining NATO.

Ukraine’s bottom line: Adhere to the pre conflict border in February 2022 as the basis for negotiations, refuse to recognize territorial changes, demand Russia to compensate for war losses and hold accountable for “war crimes”.

3. Battlefield Game: Drone Raids and Military Deployment

During the negotiations, Ukraine launched 117 drone strikes on Russia’s four major air bases on June 1st, claiming to have destroyed 41 strategic bombers (including core equipment such as Tu-160 and Tu-95). The Russian side accused Ukraine of “undermining the sincerity of the negotiations”. At the same time, Russia has assembled a 125000 strong army in the Donetsk region, planning to launch a “summer offensive” aimed directly at the core stronghold of the Ukrainian Donbass defense line.

2、 Geopolitical risk escalation: geometric amplification of gold safe haven premium

The breakdown of negotiations and the intensification of battlefield conflicts have led to a comprehensive outbreak of market risk aversion, with gold becoming the biggest winner. On the morning of June 3rd in the Asian market, spot gold hit a high of $3392, a nearly 3% surge from the previous trading day’s closing price, setting a new three week high. Currently fluctuating around $3355 per ounce, we need to be cautious of short-term adjustments.

1. Safe haven buying surged by 300%

According to LBMA data, after the announcement of the breakdown of the negotiations, institutional investors’ safe haven buying of gold surged by 300% year on year, hitting a single day peak since the outbreak of the Russia-Ukraine conflict in 2022. The main COMEX gold futures contract once broke through $3404.7 per ounce, triggering automatic buying in the quantitative trading system.

2. Resonance between the depreciation of the US dollar and expectations of interest rate cuts

The US manufacturing PMI fell to a six-month low of 48.5 in May, with supplier delivery times extending to the longest in nearly three years and significant stagflation characteristics. The market’s probability of the Federal Reserve cutting interest rates in September has risen to 87%, and the US dollar index plummeted 0.75% to 98.60 on Monday, hitting a new low since April 22, providing the most direct upward momentum for gold.

Risk Warning: The uncertainty of geopolitical situation and tariff policies may cause severe market fluctuations. It is recommended to control the position within 10%. If the gold price unexpectedly breaks through the key support of $3350, it is necessary to decisively cut losses and turn to a wait-and-see approach.

Note: As of 16:00 on June 3, 2025, the market is constantly changing, and trading strategies need to be adjusted in conjunction with real-time market trends.