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Gold Price Leaps to $2400 as Nato-Russia Tensions Worsen, US Inflation Slows

GOLD PRICES leapt to 7-week highs on Thursday, jumping through $2400 per Troy ounce against a weaker Dollar after new US data said inflation in the world's largest economy slowed again last month while Nato-Russian tensions badly worsened over Ukraine.
CPI inflation came in at 3.0% on the Bureau of Labor Statistics' first estimate for June, with 'core' inflation – excluding fuel and food – slowing to 3.3% per year, the weakest since spring 2021 and 0.1 points below analysts' consensus forecasts.
Longer-term interest rates sank in the bond market, and US stock-market futures pointed higher, while the price of silver hit 6-week highs in Dollar terms at $31.75 per Troy ounce, jumping by 2.7% in just 15 minutes.
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The leap in both gold and silver was more muted outside the US currency, with UK Pound gold prices still trading below last weekend's levels as bullion for Euro investors reached 1-week highs.
Western leaders meeting in Washington for Nato's 75th anniversary meantime agreed overnight to give Ukraine $43 billion in aid to fight against Russia's invasion, with outgoing Secretary-General Jens Stoltenberg saying that the former Soviet state is on an "irreversible" path to joining the military alliance – "not a question of if, but when."
From 2026, the USA will also re-deploy long-range cruise missiles in Germany after a break of more than 3 decades following the end of the Cold War.
"Washington is making a serious mistake," said Russia's Deputy Foreign Minister Sergei Ryabkov, "increasing the risk of a missile arms race...instead of aspiring for peace, like Russia does."
"The US government is currently spending almost a fifth of all tax revenues to pay the interest on their borrowings," says a note from $28 billion UK asset managers Ruffer.
"That's already more than the entire defence budget today...[and] the government is forecasting that interest costs will rise to 35% of total revenues by 2054."
US government debt and interest payments. Source: Ruffer
With "financial repression" likely to force interest rates lower to reduce the state's debt burden, "protection comes in the form of UK and US inflation-linked bonds alongside gold and other precious metals, and commodity exposure," says Ruffer.
"US Treasuries offer attractive yields at current levels as well as some of the risk mitigation properties of gold," says the mid-2024 Wealth Outlook from US financial services giant Citi, noting the precious metal's "record highs but risks too."
"India advocates for peace," Russia's Peskov went on following the Nato announcements today, saying that "It fully complies with [the Kremlin's] vision" after Prime Minister Narendra Modi – re-elected last month but losing his Hindu-nationalist BJP party's majority in New Delhi's Parliament – greeted Russia's President Vladimir Putin with a 'bear hug' on arriving for a 2-day visit to Moscow on Monday.
That trip was condemned by Ukraine's Volodymyr Zelensky, coming on the day that Russian missiles destroyed a children's hospital in Kyiv, killing at least 2 and injuring 50 people.
Gold's Dollar price jump today put it within 2% of mid-May's record high, up 16.3% from the day Russia began its all-out invasion in February 2022 and almost 1/3rd higher from 7 October's Hamas attacks in southern Israel.
Israel's Jerusalem Post today accused UK medical journal The Lancet of "publishing a new blood libel" by printing a letter from 3 doctors saying that "it is not implausible to estimate that up to 186,000 or even more deaths could be attributable to the current conflict in Gaza" amid the IDF's invasion following the 7th October atrocities.
China's Communist Party dictatorship meantime reacted angrily to Nato describing Beijing as a "decisive enabler" of Russia's war in Ukraine through continued trade, with officials urging the Western military alliance "to reflect on the root cause of the crisis...rather than shift blame [with comments]full of Cold War mentality and belligerent rhetoric...provocations, lies, incitement and smears."
The visit of Japan's Defense Minister to the Philippines earlier this week "has cast a long shadow over the security landscape of East Asia," says a separate opinion column in Beijing's China Daily today, calling again for Manila to abandon the neighboring reefs, shoals and islands over which China claims sovereignty and accusing it of a "confrontational attitude...serving the interests of the US, which seeks to curb China's rise by strengthening its military and ideological alliances."

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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