Gold price surge: Yellow metal to see ‘substantial’ climb as Ukraine war fears loom

Russian UN official slams western ‘hysteria’ over Ukraine invasion

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Gary Wagner, editor of TheGoldForecast.com said that tensions in Eastern Europe, as well as inflation that is unlikely to dissipate soon, are forces that will push gold to move “substantially”. The United States has indicated that Russia continues its troop buildup on the borders of Ukraine.

Yesterday was the first time since the onset of the buildup of Russian troops on Ukraine’s borders that there appeared to be the possibility that this crisis would de-escalate.

This was based on statements by Vladimir Putin saying that they are moving troops away from the border.

However, the belief that the geopolitical crisis was de-escalating could be short-lived.

According to the New York Times: “Russia said it was continuing to pull troops back from near Ukraine, but Secretary of State Antony Blinken and the head of NATO said they had seen no indication of a withdrawal.

“Still, Western officials were cautiously hopeful for a diplomatic solution to the crisis.”

Mr Wagner told David Lin, anchor for Kitco News that if war does break out, a sustained geopolitical crisis would push both the US dollar and gold up together.

He said: “We had multiple days in the last couple of weeks in which we saw safe haven plays into the dollar and gold concurrently.

“So while it would pressure gold, it would hold back the rise but [would not] necessarily be so strong that gold moves gold with that adversity.

“I think that dollar strength and gold can move in tandem during that kind of a conflict, in the same way that US equities and gold move in tandem when you have a highly accommodative Federal Reserve.”

Mr Wagner explained that inflation will continue to provide tailwinds for the gold price this year, especially when wholesale prices, as indicated by the producer price index (PPI), remain elevated.

On Wednesday, core PPI (Producer Price Index) was reported to have climbed 6.9 percent year-over-year.

He said: “The PPI that came out [Wednesday had] an uptick in it. Obviously, as wholesale prices go up for manufacturers for goods and services, they will inevitably pass those higher prices onto the consumer.

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“Anytime you have the PPI going higher, the first thing that it tells you is that inflationary pressures aren’t stabilising, they’re not peaking, they are in fact going to continue to move higher.

“Add that to the PCE that came out, that is also at a 40-year high, and really what we’re looking at is persistent inflation that, I believe, will not go to a target level by the Federal Reserve for at least a year or two years.”

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