Gold, silver prices rise as Putin’s comments, US economic data boost demand for safe assets

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on Jun 14, 2024
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  • Gold climbed 1.15% to $2,330.67 per ounce at 6:50 am ET, while silver increased by 0.98% to $29.25 per ounce.
  • The optimism around a potential rate cut by the Federal Reserve has bolstered gold prices.
  • The probability of a rate cut in September has increased to 67%, up from 63%.

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The prices of gold and silver rose on Friday as investors sought safe-haven assets following remarks by Russian President Vladimir Putin.

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In a speech at the Russian Foreign Ministry’s meeting, Putin warned that the world is “close” to the point of “no return” due to the Western powers’ “arrogance.”

He also emphasized the need for a new global security system and stated that any dialogue on Ukraine must include Russia.

Putin indicated that Moscow would be willing to end the conflict if Kiev withdrew its forces from the four territories Russia integrated into its territory in 2022.

Gold and silver price movements

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Gold climbed 1.15% to $2,330.67 per ounce at 6:50 am ET, while silver increased by 0.98% to $29.25 per ounce.

This rise reflects growing market uncertainty and the appeal of precious metals as safe-haven investments amid geopolitical tensions.

Weekly gain for gold amidst US economic data

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Gold is on track for its first weekly gain in four weeks, supported by recent US economic data suggesting easing price pressures.

The optimism around a potential rate cut by the Federal Reserve has bolstered gold prices, which have risen by 0.5% for the week. However, the gains have been tempered by the absence of significant central bank purchases, particularly from China.

Fed rate cut speculation supports gold

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Investors are closely watching statements from Federal Reserve officials, with many anticipating two interest rate cuts this year as inflation trends towards the Fed’s target. This speculation has provided support for gold prices.

Despite short-term fluctuations driven by market sentiment, these pullbacks may present buying opportunities for investors.

Inflation data and treasury yields

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US producer prices unexpectedly fell by 0.2% in May, falling below economists’ expectations and indicating easing inflation.

This follows a cooler-than-expected Consumer Price Index (CPI) report earlier in the week, which has fueled hopes for a Fed rate cut in September.

Consequently, the yield on 10-year US Treasury bonds edged lower to 4.227%, while the 2-year Treasury notes saw a slight increase to 4.69%.

Investor sentiment and rate cut prospects

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The probability of a rate cut in September has increased to 67%, up from 63% before the release of the producer price data.

Analysts from Deutsche Bank note that the recent data has bolstered investor confidence in potential rate cuts, further supported by a strong 30-year Treasury auction.

Market forecast for gold

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Given the current economic data and investor sentiment, gold is likely to remain supported in the near term. Continued signs of weakening inflation could enhance gold’s appeal as a safe-haven asset.

However, traders should remain cautious of potential market pullbacks, which could provide opportunities to enter the market. The overall outlook for gold appears bullish, driven by expectations of rate cuts and ongoing softness in inflation.

Federal Reserve System Gold Russia Silver USA Vladimir Putin Economic Precious Metals Stock Market