Fed’s Key Inflation Gauge Spikes 5.4% for March

Mar. 31, 2022

CPI

The core personal consumption expenditures (PCE) price index rose 5.4%, more than this time last year, making it the highest increase in close to 4 decades. The Federal Reserve considers the PCE price index as the most reliable indicator for inflation. Because of higher prices, consumer spending has drastically decreased for the month of March as well.

In other news, the Labor Department announced that initial jobless claims reached 202,000 for the week of March 26. Although the 14,000 increase is lower than recent estimates, the total number of jobless claims remains higher than pre-pandemic numbers. Disposable income reached 0.4%, coming in below the expected 0.5% figures. 

Gold grew 0.36% to $1,948.00 per ounce. Silver jumped 0.42% to $25.26 per ounce. Platinum decreased 1.21% to $1007.00 per ounce, while Palladium rose 0.41% to $2,337.00 per ounce. Bitcoin fell 1.32% to $46,456.40.

Germany Begins to Ration Gas as Russian Ruble Payment Approaches

Mar. 30, 2022

German Flag

German Economy Minister Robert Habeck announced an “early warning” national emergency on Wednesday stating that the country will implement its first measure out of three to ration gas supplies. This first measure calls on companies and consumers to minimize gas consumption. The second level would be a raised alarm, implemented if energy levels are significantly disrupted but are still manageable through market-based measures, while the third level will require the German government to distribute the remaining gas supplies as it sees fit.

Russia imposed a new payment method last week that would require NATO allied forces to make payment for Russian energy supplies in rubles or gold. Germany and EU members voted on refusal to make payment as suggested by Moscow, leading the EU to face massive energy shortages and possible recession.

Gold grew 0.67% to $1,940.80 per ounce. Silver jumped 0.71% to $25.22 per ounce. Platinum increased 1.32% to $1024.40 per ounce, while Palladium rose 4.07% to $2,295.00 per ounce. Bitcoin fell 0.69% to $47,126.20.

 

Precious Metals Fall as Russia Begins to Withdraw Forces from Kyiv

Mar. 29, 2022

Precious Metals

Moscow has reduced its military presence in Kyiv and Chernigov following positive peace talks with Ukraine. Russian officials said Tuesday that this new military strategy aims to encourage mutual trust on both sides during peace negotiations. One key demand that Russia has proposed to Ukraine is an agreement to neutrality and a non-nuclear status. 

Kyiv seems to be on the verge of agreeing to some Russian demands, which have made investors more optimistic about a de-escalation of the conflict in the region. As a result, oil prices receded with West Texas Intermediate (WTI) crude oil and Brent falling significantly. Tensions are still high in Europe as the March 31 deadline for Russian gas nears as Moscow demands payment in rubles. The EU has already stated they will not pay in rubles, leading Russia to suggest that they will not deliver gas if payment is not received in the requested method.

Precious metals continue to fall significantly as peace talks progress. Gold dipped 0.44% to $1,921.20 per ounce. Silver sank 1.85% to $24.79 per ounce. Platinum decreased 1.22% to $997.40 per ounce, while Palladium dropped 5.64% to $2,160.00 per ounce. Bitcoin rose 1.74% to $47,806.80.

G7 Members Refuse Russia’s Request To Pay Rubles for Gas

Mar. 28, 2022

OPEC 

Members of the Group of Seven (G7) came to an agreement on Monday to reject Russia’s demand to pay for gas imports in rubles. G7 ministers said that the request to pay in rubles breaches existing contracts and is completely one-sided. Moscow officials believe that G7 nations breached the contracts when they imposed financial sanctions against Russia for its invasion of Ukraine. Russian lawmakers said that refusal to pay in rubles will result in a suspension of gas supplies.

Global economists are nervous about a suspension in gas imports to Europe, citing that energy disruptions on the continent will lead to a major recession. The majority of Europe’s energy supplies come from Russia. Germany, for example, receives almost half of its energy supplies come from Russia. If supplies are suspended, Germany would be in danger of experiencing massive industrial shutdowns.

Gold fell 1.01% to $1,945.90 per ounce. Silver sank 1.98% to $25.28 per ounce. Platinum decreased 1.10% to $1,013.30 per ounce, while Palladium dropped 4.41% to $2,297.50 per ounce. Bitcoin rose 1.36% to $47,519.70.

Oil Prices Fall Following EU Disagreement on Russian Crude Import Ban

Mar. 25, 2022

EU

Several EU countries failed to compromise on a prohibition of Russian crude imports on Thursday. While the US and UK worked towards a ban on Russian imports, many European countries pushed back due to their heavy reliance on Russia’s oil. To help find a solution to this roadblock, the US is currently working towards creating a task force with the EU to reduce Europe’s dependency on Russian oil. 

India is cooperating with Russia on a new payment system that will allow both countries to make monetary transactions outside of SWIFT. This new system will help Russia’s economy recover from a string of sanctions that collapsed the ruble and stock market. A similar partnership was created between Russia and China as well. Many financial institutions believe that these new business alliances will heighten the already- concerning energy crisis, with some analysts estimating crude oil prices surpassing $200 a barrel. As a result of higher energy prices, inflation is expected to hit new highs soon and many savvy investors are hedging their portfolios with precious metals.

Gold fell 0.43% to $1,957.90 per ounce. Silver sank 0.80% to $25.62 per ounce. Platinum decreased 1.18% to $1,037.70 per ounce, while Palladium dropped 0.61% to $2,560.50 per ounce. Bitcoin rose 1.95% to $44,874.80.

Russia Demands Gas Payments in Rubles 

Mar. 24, 2022

Rubles

President Putin announced on Wednesday that Russia will only accept gas payments from “unfriendly countries” in rubles. This is in response to western sanctions directed at Russia which froze Russian Forex in overseas accounts. The Russian president believes that rejecting payments with “compromised” currencies will bolster the value of the ruble and minimize the use of foreign currencies. He also noted that Russia will continue to provide gas according to pricing and volume principles made within contracts. 

The news of this new Russian payment method helped the ruble gain value against the dollar while causing oil and gas prices to grow even higher. The cost for contracts of gas with TTF European hub also rose significantly to €114 per 1MWh Wednesday evening. The German Association of Energy and Water Industries (BDEW) is trying to work out a solution to Russia’s monetary demands, but many speculators believe that Europe has very few options to work with since Russian gas accounts for 45% of Europe’s supply.  

Gold grew 0.36% to $1,957.60 per ounce. Silver jumped 1.79% to $25.88 per ounce. Platinum increased 0.29% to $1,045.70 per ounce, while Palladium dropped 0.41% to $2,560.00 per ounce. Bitcoin rose 0.43% to $43,081.80.

US Treasury Secretary Discusses Ban on Russian Gold

Mar. 23, 2022

Gold Bullion

A group of bipartisan US senators and Treasury Secretary Janet Yellen are setting a meeting to discuss new legislation targeting Russia’s $132 billion gold reserves. Russia began building up its gold reserves after western nations applied sanctions in response to Russia’s occupation of Crimea. This sanction aims to prevent Russia from monetizing its gold reserves which allows Russia to soften the economic blow from other recent sanctions. The politicians believe that the new legislation will make it more difficult for Russia to sell its gold internationally. 

In March, the same bipartisan group introduced a bill meant to close a loophole within sanctions that allow Russians to trade gold. If approved, the new bill will apply sanctions to entities that buy and sell gold with Russia. Some geopolitical analysts believe that this bill will only benefit China and other countries that still trade with Russia. China and India, major gold buyers, have been stockpiling gold over the past couple of years by record numbers. Little is known if the new bill will sanction countries like China if they do help Russia monetize its gold reserves.

Gold grew 0.53% to $1,939.60 per ounce. Silver jumped 1.17% to $25.39 per ounce. Platinum increased 0.29% to $1,050.10 per ounce, while Palladium rose 1.44% to $2,596.00 per ounce. Bitcoin fell 0.70% to $42,075.50.

Egypt’s Central Bank Devalues Currency by 14%

Mar. 22, 2022

Cairo

The Russian/Ukrainian war has caused foreign investors to withdraw billions of dollars from the Egyptian treasury market. This prompted the Egyptian central bank to devalue its currency by 14% on Monday, causing the Egyptian pound to fall to $18.17 against the US dollar. The central bank also increased its interest rates by 100 basis points.

Following the invasion of Ukraine by Russian forces, Egypt’s economic growth has also been threatened by higher wheat prices. Ukraine and Russia are the world’s largest producers of wheat – and are Egypt’s main suppliers. It is estimated that higher wheat prices will double Egypt’s annual spending budget to $5.7 billion. The potential for food shortages within Egypt is also a great cause of worry for geopolitical analysts, warning that a food crisis in the region can escalate into famine and uprisings. 

Gold fell 0.65% to $1,930.70 per ounce. Silver dropped 1.89% to $25.00 per ounce. Platinum decreased 1.64% to $1,046.10 per ounce, while Palladium plunged 2.06% to $2,600.50 per ounce. Bitcoin jumped 4.38% to $42,815.40.

Malaysia Considers Adopting Bitcoin as Legal Tender

Mar. 21, 2022

Digital Currency

The Communications and Multimedia Ministry of Malaysia has proposed to adopt bitcoin (BTC) as legal tender. The Malaysian government believes that allowing the use of cryptocurrency will help younger citizens use bitcoin more easily. Cryptocurrency transactions would be overseen by the Bank Negara Malaysia and the Securities Commission. Many people within the cryptocurrency community see this proposal as a positive win for bitcoin, hopefully leading to higher valuations of the token.

Bitcoin has become the go-to digital currency for countries looking to allow cryptocurrencies as legal tender. El Salvador has become one of the biggest proponents of bitcoin and is currently the only country that authorized it as legal tender. Other countries like Honduras and Mexico are also trying to adopt bitcoin as an alternative currency. Investors believe that cryptocurrencies and precious metals will continue to gain in both popularity and in use, as economic conditions worsen due to higher inflationary pressures from local currencies. 

Gold grew 0.80% to $1,944.70 per ounce. Silver rose 1.04% to $25.53 per ounce. Platinum increased 1.56% to $1,066.30 per ounce, while Palladium jumped 3.10% to $2,614.50 per ounce. Bitcoin dropped 0.96% to $40,886.20.

Housing Market Suffering 

Mar. 18, 2022

Real Estate

Lot inventory, soaring prices, and higher interest rates are creating financial issues for consumers and housebuilders. Real estate sales fell in February more than expected, hitting 7.2% month to month. In February, the median price for a home was $357,000, over a 15% increase compared to 2021. 

Even though sales took a dip last month, competition is still intense. New listings are going to contract in as little as 18 days and 68% of offers are facing fierce bidding wars. Investors are making it very difficult for regular buyers, accounting for 19% of home purchases for February. Real estate investors believe that with higher inflation, rising interest rates, and a possible recession, housing prices will come down considerably. 

Gold fell 0.38% to $1,945.10 per ounce. Silver dipped 1.04% to $25.36 per ounce. Platinum increased 0.98% to $1,058.30 per ounce, while Palladium rose 0.25% to $2,571.00 per ounce. Bitcoin dropped 0.88% to $40,590.50.

How will the Fed Rate Hike Affect Your Wallet?

Mar. 17, 2022

The Fed

On Wednesday, the Federal Reserve initiated its first interest rate in response to the country’s economic performance. This marks the first interest rate hike since 2018, with the new rate rising by .25% – still relatively low compared to pre-pandemic rates. The interest rate determines the rate banks will pay for borrowing money from the Fed, which in turn affects the amount citizens will pay when needing a loan.

At the beginning of the COVID-19 pandemic in 2020, the Fed lowered interest rates to 0%-0.25%, allowing borrowers to take advantage of record-low mortgage, auto loan, and credit card rates, which helped encourage spending. Unfortunately, higher spending accelerated inflation due to increased demand for goods. This caused supplies to diminish while prices rose to record levels. Now the Fed aims to cut back on the supply of money by making it more expensive to borrow.

Mortgage Rates

Mortgage rates started to rise right after the Fed announced it would increase interest rates, causing many would-be home buyers to forgo buying a house. As of March 17, mortgage rates are set at 4.719% for a 30-year mortgage, up from 3% a year ago. This can change since mortgage rates closely track 10-year Treasury notes, which can help bring down mortgage rates occasionally. 

Credit Cards

All credit card users will experience a rise in their variable interest rates, which will be evident within one to two billing cycles. Credit card debt, which can be a drag on finances, has reached record highs for Americans. If you carry a balance, prepare to pay more interest on it. Depending on your credit history with the credit card issuer, you might be able to renegotiate a lower interest rate. 

Auto Loans

Most auto loans will not be affected by the new Fed rate. Since automakers are highly competitive and provide their own financing, rates can remain low. Make sure to shop around for auto loans to get the best rate.

Precious Metal and Bitcoin Prices

Gold spiked 1.11% to $1,956.90 per ounce. Silver jumped 1.72% to $25.75 per ounce. Platinum increased 1.28% to $1,051.80 per ounce, while Palladium rose 5.97% to $2,579.00 per ounce. Bitcoin rose 4.24% to $39,105.80.

Are China and Saudi Arabia Working on Creating a Petroyuan?

Mar. 16, 2022

KSA Flag

It has been reported that Saudi Arabia is entertaining the idea of pricing its oil in yuans. Pricing oil in yuans would tremendously undermine the US petrodollar and could even knock off the dollar as a reserve currency. Currently, the majority of oil is bought and sold using dollars. This forces countries to hold large amounts of dollars in their banks in order to purchase oil, which props up the dollar as the ultimate de facto world currency. 

Why is the Petrodollar so Important for the US?

The petrodollar gives tremendous power to the US over Saudi Arabia and other countries since they need dollars to buy the commodity. Since the majority of the world’s oil sales are made in dollars, OPEC countries receive large amounts of US dollars, which are then reinvested into the American economy. The US has used the petrodollar as leverage against countries that defy US global policy by implementing sanctions and embargoes. 

New Economic Partners

Meanwhile, China has been working towards pushing its own currency as an alternative to the dollar. Because of recent internal conflicts between the King of Saudi Arabia and the Biden administration, Saudi Arabia seems to want to create a new economic partner; a role China may readily accept. Allowing the sale of oil with yuans will elevate China as a new dominant world power. 

What is the US doing to Prevent a Petroyuan?

US officials are reportedly unhappy with this new development but are seemingly doing little to mitigate this turn of events. Plus, Saudi Arabian officials appear very dissatisfied with the US lead Iran nuclear deal which threatens to undermind the country’s influence in the region. Can the threat of a Chinese Petro currency bring the US to the Saudi bargaining table, or is it too late? How long will the dollar continue to reign as the loan reserve currency? Given these tumultuous times, it would be wise for the US to tread carefully moving forward. 

Precious Metal and Bitcoin Prices

Gold fell 0.66% to $1,914.60 per ounce. Silver dropped 1.63% to $24.78 per ounce. Platinum increased 1.93% to $1,030.70 per ounce, while Palladium dipped 0.55% to $2,429.00 per ounce. Bitcoin rose 4.24% to $39,105.80.

Russia Could Evade Sanctions Using Gold

Mar. 15, 2022

Gold bars

NATO allies have implemented crippling sanctions on Russia for its invasion of Ukraine. These economic sanctions have targeted many of Russia’s top financial institutions, including the Central Bank of Russia. The sanctioning of Russia’s central bank has rendered about $600 billion useless, tanking the Russian ruble. The collapse of the ruble has left the country vulnerable to economic hardship.

Russian military

With Russia’s foreign assets frozen, Russia will have to depend on one of its most valuable trump cards: its extensive gold reserves. Since 2014, the Central Bank of Russia has been increasing the amount of gold investment after NATO allies imposed sanctions on Russia for the invasion of Crimea. Now, Russia holds a sizable portion of gold reserves, estimated at a little over $120 billion. Many economists speculate that Russian president Vladimir Putin will use these gold assets to fund not only the war in Ukraine but also Russia’s economy. 

Putin

 

Why is Gold an Important Tool for Russia?

Gold is viewed as an effective hedge against economic sanctions since it can be transported around the world virtually untraceable and outside international financial markets. Furthermore, gold has become very desirable to central banks around the world, many of which have added considerable amounts of the yellow metal to their reserves over the last two years.

Pipeline

Currently, Russia is not relying on its gold reserves to sustain its wrecked economy. The government of Russia is still funding itself through the sale of oil, natural gas, and coal, earning a considerable amount of foreign currency to soften the economic blow from sanctions. They are also still selling large amounts of palladium and other natural resources, so Russia isn’t completely isolated from the world economy. 

China

Russia also has many strong trading partners that have not joined in sanctioning the Kremlin and will continue to do business with the country. China has become a strong Russian partner and has worked closely to develop an economic system independent from the US, UK, and EU. Also, China has been actively purchasing gold by the tons for many years. So if Russia does decide to liquidate its gold reserves, China could be one of its largest customers.

Precious Metal and Bitcoin Prices

Gold price

Gold fell 2.13% to $1,919.60 per ounce. Silver dropped 1.36% to $25.07 per ounce. Platinum decreased 3.01% to $1,024.00 per ounce, while Palladium rose 0.52% to $2,416.00 per ounce. Bitcoin sunk 1.44% to $39,097.50.

China Suffers From New Spike in COVID-19 Cases Leading to Major Production Shutdowns

Mar. 14, 2022

China

Mainland China is experiencing its worst COVID-19 flare-up since the beginning of the pandemic. To curb the spread, major cities are restricting business activity and implementing stricter COVID-19 protocols. Shenzhen officials notified the city’s manufacturers, including Apple’s supplier Foxconn, to suspend all production.

Major tech shortages are expected to follow the production cut from Shenzhen. Economists are worried that Chinese production shutdowns will worsen supply chain bottlenecks and apply more inflationary pressure to prices. Investors are purchasing more gold and silver to protect their portfolios against inflation.

Gold fell 1.81% to $1,963.60 per ounce. Silver dropped 3.83% to $25.28 per ounce. Platinum increased 4.37% to $1,059.10 per ounce, while Palladium dove 16.33% to $2,384.00 per ounce. Bitcoin sunk 0.83% to $39,105.80.

Russia Threatens to Shut Off Nord Stream 1

Mar. 11, 2022

Pipeline

Russia threatened to cut off energy supplies to the EU in response to imposed sanctions placed on Russia by the West. Deputy Prime Minister Alexander Novak believes Russia should impose countersanctions that mirror western sanctions. To this end, oil prices spiked after the possible Russian counter-sanctions were announced, worrying many investors about the outcome.  

Gold fell 0.82% to $1,990.40 per ounce. Silver dropped 0.21% to $26.16 per ounce. Platinum increased 0.29% to $1,096.10 per ounce, while Palladium dove 5.68% to $2,831.00 per ounce. Bitcoin sunk 0.83% to $39,105.80.

Inflation Hits New 40-year High

Mar. 10, 2022

cpi

The consumer price index (CPI) rose 7.9% in the month of February, the highest level recorded since 1982. The biggest contributors to CPI were groceries, shelter, and gas. Excluding energy and food prices, core inflation jumped 6.4%- a 40-year high as well. Additionally, employee salaries fell 0.8% against inflation, a 2.65% drop from 2021.

Financial analysts believe that inflation rates will spike significantly for the month of March due to Russian sanctions. The sanctions have caused commodities to skyrocket since Russia is a leading producer of many natural resources. To protect against rocketing inflation, investors are filling their portfolios with precious metals like gold and silver.

Gold grew 0.70% to $2,014.50 per ounce. Silver jumped 0.91% to $26.31 per ounce. Platinum increased 0.56% to $1,103.40 per ounce, while Palladium rose 1.04% to $3,022.50 per ounce. Bitcoin fell 6.71% to $39,144.20.

Biden Administration Signs Executive Order on Cryptocurrency

Mar. 9, 2022

Bitcoin

President Biden signed a new executive order on Wednesday that examines the benefits and risks of cryptocurrencies. Digital currencies will now be reviewed for financial stability, illicit activity, consumer protection, financial inclusion, US competitiveness, and responsible innovation. The administration also confirmed that the Biden administration wants to investigate the prospect of a digital dollar.

Cryptocurrencies responded positively to the new executive order, with Bitcoin gaining 8% Wednesday. News about the executive order received mixed reactions from market insiders and crypto leaders. Many believe that added scrutiny of bitcoin and other cryptocurrencies will only stifle innovation and financial freedom for individuals. Some worry that the executive order will eliminate paper money and consolidate more financial power to the government.

Gold fell 2.98% to $1,996.90 per ounce. Silver dropped 1.61% to $26.21 per ounce. Platinum decreased 5.39% to $1,113.40 per ounce, while Palladium dove 4.65% to $3,060.00 per ounce.

Higher Inflation Rates Have 64% of Americans Living Paycheck to Paycheck

Mar. 8, 2022Inflation

American households are struggling to make ends meet, as inflation continues to skyrocket due to loose monetary policies, increased demand for goods that caused supply chain bottlenecks, and now an energy shortage induced by the Russian invasion of Ukraine. Gasoline, food, electronics, and other consumer goods are quickly rising in price. Even worse, wage growth is not keeping up with inflation and has 64% of Americans living paycheck to paycheck, according to a LendingClub report. 

Depending on where you live, prices are considerably higher. In the United States, 48% of people polled earning over $100,000 report living paycheck to paycheck, especially in cities such as New York and San Francisco. According to recent data, households in more expensive cities need to make close to $122,000 a year to feel financially stable. During this time of uncertainty, many Americans are turning to gold and silver as a way to protect their wealth. 

Gold grew 2.41% to $2,053.20 per ounce. Silver rose 4.83% to $27.00 per ounce. Platinum increased 4.82% to $1,197.50 per ounce, while Palladium spiked 5.08% to $3,146.50 per ounce. Bitcoin climbed 1.08% to $38,680.40.

Gas Prices Skyrocket Across the Country

Mar. 7, 2022

High Gas Prices

Oil hit its 13-year high over the weekend, and the US national average for regular gasoline reached $4.06 on Monday. Prices are expected to continue to rise if Russia stops the flow of fuel to the west. This oil disruption is putting pressure on an already high inflation rate, prompting many high profile people, including Elon Musk, to call on governments to boost oil and gas production immediately.  

Some traders and oil refiners have stopped purchasing Russian oil in fear of running afoul of any possible sanctions. However, some companies have decided to overlook the conflict of buying Russian oil entirely. Recently, Shell bought discounted Russian oil at a bargain price and was criticized by the international community. Shell did not violate any sanctions, but many leaders argue that companies should consider not purchasing oil from Russia.

As oil prices push inflation rates to higher levels, investors continue to purchase precious metals as a safe-haven investment. Gold grew 0.49% to $1,997.60 per ounce. Silver rose 0.11% to $25.83 per ounce. Platinum increased 1.07% to $1,049.60 per ounce, while Palladium spiked 0.03% to $3,057.50 per ounce. Bitcoin dipped 1.67% to $39,050.50.

Gold Spikes as Russian Forces Invade Nuclear Power Plant

Mar. 4, 2022

nuclear

The Russian military attacked a nuclear power in Ukraine Friday, creating a fire within the facility. First, the siege began with a bombardment of certain areas in the nuclear power plant, then escalated to a firefight. Then, the Russian forces were able to occupy and take control of the nuclear facility and extinguish the fire. The International Atomic Energy Agency (IAEA) confirmed that the plant is intact and no essential equipment was damaged. The international community condemned the attack.

Financial markets reacted to the nuclear plant invasion, with the stock marketing starting in the red this morning, while precious metals and oil prices soared. Gold grew 0.96% to $1,963.40 per ounce. Silver rose 1.35% to $25.66 per ounce. Platinum increased 3.06% to $1,128.40 per ounce, while Palladium spiked 5.34% to $2,964.50 per ounce. Bitcoin dipped 1.92% to $40,632.80.

As Oil Prices Exceed $110 a Barrel, are we Headed Towards a Supercycle?

Mar. 3, 2022

Oil refinery

There is a global shortage of oil, with supplies shrinking by the day. It is expected that further energy disruptions will follow if Russia bans the export of oil to the EU. Spare oil is coming under immense stress. This will create what economists call a “supercycle”. A supercycle is a prolonged and sustained demand for a commodity that exceeds what producers can supply. With an increase in oil demand, a supercycle seems inevitable.

Biden announced that the US will approve the release of 60 million barrels of oil from its reserves. Consequently, many economists argue that the release of reserves will further increase the US’s dependence on foreign oil. Analysts believe that the lack of global energy supplies will cause GDP to go into negative territory, sparking hyperinflation. More and more investors are turning towards precious metals to safeguard against these threats.

Gold grew 0.2% to $1,936.30 per ounce. Silver fell 1.19% to $25.18 per ounce. Platinum increased .9% to $1,096.40 per ounce, while Palladium spiked 2.76% to $2,780.50 per ounce. Bitcoin dipped 1.92% to $43,073.10.

Gold and Silver Prices Fall After Fed Hints at Rate Increase

Mar. 2, 2022

Government

Federal Reserve Chairman Jerome Powell is scheduled to testify to Congress on Wednesday about the state of the economy. Analysts believe Powell will speak about inflation and Q1 GDP figures. The Fed is expected to raise interest rates in March. But with the ongoing war in Ukraine, little is known on how high the rates will go. Sanctions set between Russia and NATO allies are worrying investors that a recession will hit the global economy.

Oil prices surpassed $105 per barrel. This came as a result of a threat that Russia will completely shut down its energy supply to Germany. Furthermore, about 52% of Germany’s energy comes from Russia, while 48% is supplied through renewable energy. An energy shutdown in Germany would be catastrophic for the global economy and the US dollar. Investors have decided to hedge against the devaluation of the dollar by buying more gold and silver assets.

Gold fell 0.9% to $1,932.80 per ounce. Silver dropped 1.5% to $25.19 per ounce. Platinum spiked 0.2% to $1,069.40 per ounce, while Palladium increased 3.9% to $2,669.50 per ounce. Bitcoin dipped 0.2% to $44,312.00.

Russia to Buy More Gold as Sanctions Tank Ruble

Mar. 1, 2022

Russia

Russia’s announced Sunday that it would add more gold to its reserves as a way to hedge against sanctions. Russia currently possesses the fifth largest gold reserve in the world. Putin intends on growing its stockpile to control the devaluation of the ruble. The US also removed several Russian banks from SWIFT which will prohibit the banks from transferring currency internationally.

Gold Bars

Firstly, Russia’s announcement pushed gold higher. Also, some investors expect the price of gold to break the $2,000 an oz mark soon. In addition, Goldman Sachs estimates that the price target of gold will soon hit $2,150 an oz. “Gold’s unique role as the currency of last resort will likely be apparent if restrictions on Russia’s central bank accessing its offshore reserves leave it leveraging its large domestic gold stockpiles to continue foreign trade, most likely with China,” a Goldman analyst said.

Gold jumped 0.73% to $1,931.20 per ounce. Silver grew 1.95% to $25.06 per ounce. Platinum increased 0.58% to $1,065.90 per ounce, while Palladium spiked 4.59% to $2,737.50 per ounce. Bitcoin rose 1.51% to $43,851.50.

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