By John Meyer, financial consultant – Eurasia Business News, February 17, 2022
High inflation and intensifying geopolitical tensions boost gold prices for several weeks and put pressure on stocks and bond yields.
Gold prices on Thursday jumped to a maximum since June 2021 due to increasing persistent high inflation in the U.S. and Europe and increasing tensions between Russia and Ukraine and fears of the outbreak of an armed conflict in Europe. Gold prices were trading just above $1,900 on February 17, while silver prices gained 1.16 % on Thursday to $23.83 an ounce.
At the trade closure gold prices were at $ 1,898.05 per troy ounce.
U.S. gold futures settled 1.6% higher at $1,902.
The Dow Jones Industrial Average dropped more than 600 points ON Thursday, its worst one-day loss of 2022. Geopolitical tensions around Ukraine and the prospect of tighter monetary policy ahead have roiled markets.
Officials in the separatist republics of Donetsk and Luhansk accuse Ukraine of shelling their territories in violation of the ceasefire agreement. Meanwhile, the White House, citing intelligence reports, stated that Russia has not withdrawn its troops from the border with Ukraine, as previously reported, but, on the contrary, is increasing its military contingent.
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This increase in tension boosts the demand for defensive assets, which include precious metals.
At the same time, the limiting factor for gold prices is the expectation of an early increase in the rate of the U.S. Federal Reserve, after a decade of massive quantitative easing. The U.S. central bank would do several rate hikes in 2022 to counter persistent high inflation.
Full year 2021 gold demand (excluding OTC) increased to 4,021 tonnes, propelled by Q4 demand which jumped almost 50% to a 10-quarter high, reported the World Gold Council.
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