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Gold Price Jumps to $2050 as PCE Inflation Slows, Putin Warns Nato of Nuclear War

The GOLD PRICE leapt on Thursday, hitting 4-week highs at $2050 per Troy ounce, after Russia's President Putin threatened nuclear war with Nato and new US data said that inflation and economic activity both continue to slow in the world's largest economy.
Annual inflation on the core PCE measure – the Federal Reserve's preferred gauge, with a 2.0% target – slowed in January to 2.8%, the weakest pace in almost 2 years.
Pending home sales sank meantime, while this month's manufacturing activity in the mid-west today showed its sharpest contraction since July on the Chicago PMI and national claims for jobless benefits rose faster than analysts expected on the latest weekly figures.
Betting on where the Fed's key interest rate will end 2024 dropped back on the PCE and other economic data, with traders' average forecast dropping below 4.53% per annum – the lowest in 6 sessions – after market consensus rose earlier this week to match the Fed's own prediction of 4.6%.
Chart of gold priced in US Dollars, last 5 years. Source: BullionVault
"In spite of the repositioning of market expectations on the scale of interest rate cuts this year," says Jonathan Butler, head of business development in precious metals at Japanese conglomerate Mitsubishi, "gold has remained remarkably robust in February."
Trading around $2048 per Troy ounce at today's 3pm London benchmarking auction, the price of gold set its highest fix of the month, albeit $5 down from the last day of January, itself $10 down from the last day of last year.
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"[The fact] that bullion remains well bid," says Butler, "is perhaps testament to ongoing geopolitical concerns as the war in Ukraine enters its third year and a ceasefire in the Israel-Hamas war proves elusive."
One day ahead of the funeral of Russian opposition leader Alexei Navalny in Moscow, and with Western leaders moving closer to handing income payments from frozen Russian state assets to Ukraine, "We have weapons that can strike targets their territory," said Russia's Vladimir Putin today in his longest-yet annual address to the Federal Assembly, rebuking this week's suggestion by France's President Emmanuel Macron that Nato members should add their own troops to the military alliance's support for Ukraine.
"The consequences," warned Putin, "will be much more tragic [even than] the fate of those who once sent their contingents to our country [in the past]. [It] really risks a conflict using nuclear weapons, which means the destruction of all civilization."
Contrary to Macron's claim of "no consensus" around sending Nato troops into Ukraine, officials from the USA, UK, Germany, Poland, the Czech Republic, Italy and Spain have all publicly stated their opposition to the idea.
Meanwhile in Gaza, "Negotiations [towards a ceasefire and return of hostages] are not an open process at the expense of the blood of our people," said the Hamas militia today, threatening to quit talks with Israel after IDF troops apparently killed over 100 Palestinian civilians waiting for food aid.
Like the gold price, global stock markets also rallied following today's PCE data, reversing the last of yesterday's 0.4% drop to a 1-week low on the MSCI World Index.
"Gold bulls just needed an excuse to buy, and they found it," Reuters quotes one analyst.
The UK gold price in Pounds per ounce rose to 3-week highs near £1620, while the Euro gold price fixed around €1890, barely €12 below its all-time peak of early December.
With gold in Dollar terms jumping by 1.1% on the PCE inflation data, silver prices reversed half of this week's earlier 3.0% drop to trade back at $22.68 per Troy ounce.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum 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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