'Debasement Trade Over' But Gold Rallies on Stagflation Data as Trump Backs Crypto

GOLD PRICES fell yet again on Thursday, losing 2.3% in Shanghai trade before rebounding in London from a new 9-week low on worsening signs of US stagflation, while crypto-currency Bitcoin struggled to rally from another drop.

Oil leapt 2.1% from 5-week lows on Brent crude futures as the US attacked an Iranian military site and Tehran struck back, putting peace talks and the current 'ceasefire' in doubt.

With oil prices leaping since the US and Israel began this war on the last day of February, US GDP growth for January-to-March was revised down 0.4 percentage points today to 1.6% annualized, while the US cost of living in April rose 3.8% per year on the core PCE measure, the steepest inflation in 3 years.

With slower growth and rising costs pointing to stagflation for the world's largest economy, longer-term interest rates were little changed near multi-week lows in the bond market, while the US Dollar held firm on its trade-weighted DXY index.

"Investors are shying away from both Bitcoin and gold − perhaps evidence that the 'debasement trade' is dead," said news-site MarketWatch overnight, quoting US banking and London bullion giant J.P.Morgan's strategist Nikolaos Panigirtzoglou.

With gold trading as much as 5.3% lower in Dollar terms for the month of May ahead of today's sudden US stagflation fears, Bitcoin showed a 4.9% drop from end-April after exchange-traded funds tracking the price of BTC also flipped negative, seeing the heaviest weekly outflows since late-January.

"These outflows appear to be more consistent with a broad retreat by investors from the debasement trade...rather than with a rotation from Bitcoin to gold," says Panigirtzoglou, revising the thesis of a shift out of bullion into crypto which he proposed 3 weeks ago.

"America is now the CRYPTO CAPITAL of the WORLD," tweeted US President Donald Trump overnight, lambasting "crypto haters" in US regulatory agencies as well as Democrat lawmakers who want to curb the explosion in so-called 'prediction market' gambling platforms.

"We will codify a FUTURE-PROOF Digital Asset Market Structure that cannot be undone [...] and "TRUMP" will NEVER let Crypto down!"

Falling as low as $4367 per troy ounce today, gold briefly showed its steepest monthly price drop since May 2021 outside of this March's 11.8% Iran War plunge − the worst price drop since spring 2013's gold crash.

Bitcoin lost 10.2% in January and 15.3% in February to hit the lowest in 18 months before rallying during the first 2 months of the US-Iran War.

Adding to today's stagflationary picture, US data also said Thursday that surging prices and demand saw durable goods orders leap the fastest in a year last month, rising by 7.9%.

But the number of people applying for US jobless benefits also beat analyst forecasts on the latest weekly data, reaching the highest in a month for both initial and continuous claims.

Silver prices meantime rebounded by $2.35 from new 1-month lows at $71.81 per troy ounce, while platinum failed to bounce from its lowest price since the end of March at $1875.

Palladium fell to test late-March's 5-month low beneath $1340.

"Israel pounds southern Lebanon as US and Iran trade blows," says a headline meantime at Al Jazeera after the IDF crossed the long-time 'strategic buffer' of the Litani River in its northern neighbour.

"Iran urges 'unconditional' release of all its frozen assets; US defies," says Tehran's Press TV of the Pakistan-mediated peace talks.

"Not everyone is taking our warning seriously," says a Kremlin spokesman of Russia's threat to attack military facilities in Ukraine's capital Kyiv, noting that Western embassy staff have not fled the city.