Weekly Digest: EU Inflation Hits New Record, “Portfolio Killer”


4 minutes read

Feb 3, 2022

pencil sharpener with a 50 euro bill on a pink background

03/02/22: Eurozone inflation accelerates to a new record, palladium price could go up amid fears of supply disruption from Russia, ways to protect yourself from a “portfolio killer.” And more.

Investment news

The gold price steadied around $1,800 an ounce supported by a pullback in the U.S. dollar and Treasury yields. (Reuters)

The gold price rose 0.2% to $1,803.30 an ounce on Wednesday, while silver gained 0.8% at $22.82 an ounce, palladium increased 1.2% to $2,392.03 and platinum rose 0.7% to $1,034.57 an ounce.

Analysts say an escalation in tensions involving Russia and Ukraine could push palladium prices even higher due to fears of disruptions in supply from Russia, a major producer of the metal.

Read our SPOTLIGHT to see how the current geopolitical tensions can affect the gold price.

⚠️ Inflation alert: Eurozone inflation hits a new record, piling pressure on the European Central Bank. The cost of living in Europe rose to 5.1% in January, despite expectations for a sharp drop to 4.4%. (CNBC)

The ECB’s Governing Council is set to meet this week to discuss inflation, geopolitical risks, the recent rise in bond yields, and its implications for financing conditions.

Read our SPOTLIGHT to see a real-life case study on the impact of inflation.

Bad start. The US stock market has endured its worst start to the year since the global financial crisis, as rising fears of higher interest rates, geopolitical tensions, and slowing corporate earnings growth sent stocks tumbling across the board. (Financial Times)

The S&P 500 index fell 5.3 percent in January, its biggest monthly drop since the onset of the coronavirus pandemic in March 2020 and the weakest January since the global financial crisis of 2008.

Watch the video below to see how markets have moved in the first month of 2022:

Oil prices jumped to a seven-year high on Wednesday after OPEC+ stuck to its planned production increase despite some pressure from top consumers to raise production more quickly. (Reuters)

An OPEC+ source told Reuters that OPEC+ agreed to increase oil output by 400,000 barrels per day from March after a short meeting.

Image of a gold bitcoin on the world

Crypto update: Bitcoin price is now driven by ‘macro conditions', including the Fed’s policy and stock market, analysts say. (Kitco)

"The Federal Reserve and the stock market have the biggest impact on Bitcoin price. Macro is very much in the driver's seat at the moment. The classic saying is don't fight the Fed. And all the eyes are very much on the central bank's actions," GlobalBlock analyst Marcus Sotiriou told Kitco News.

Read our article Should You Buy Gold or Bitcoin?


#HowTo: How to invest in times of inflation, also known as a “portfolio killer”? Gold is among major asset classes that historically tend to perform better during higher inflation periods, market analysts say. (Reuters)

"Many investors have never experienced inflation like we have seen the last few months, so it may be a good time to revisit your portfolio and confirm whether you still feel confident," said Naveen Malwal, an institutional portfolio manager at Boston-based financial giant Fidelity Investments.

What else is happening

photo of the omicron variant coronavirus on a blue background

Companies unexpectedly cut 301,000 jobs in January for the first time in over a year as the spread of the omicron variant hit hiring, payroll processing firm ADP said in a report. This is well below the Dow Jones estimate for growth of 200,000. (CNBC)

The pandemic-sensitive leisure and hospitality sector was responsible for more than half of the decline, as companies reported a drop of 154,000.

The biggest U.S. labor organization said it strongly supported a U.S. House of Representatives bill aimed at improving competition with China, boost U.S. semiconductor production and reform key trade provisions. (Reuters)

The U.S. House plans to take up the bill later this week.

The organization representing 12.5 million workers said in a letter to lawmakers the bill's $52 billion for chips is critical to "addressing the current chip shortage that continues to adversely impact production in the automotive sector and elsewhere."

Read our SPOTLIGHT to learn everything you need to know about the supply chain crisis and chip shortage, and what it means for gold.

Russian President Vladimir Putin breaks his silence on Ukraine standoff, blames the U.S. of trying to lure Russia into a war. (Reuters)

At a news conference, Putin raised the possibility of war between Russia and NATO if Ukraine joined the alliance and then attempted to take back Crimea from Russia by force.

"Let's imagine Ukraine is a NATO member and starts these military operations. Are we supposed to go to war with the NATO bloc? Has anyone given that any thought? Apparently not," he said.

And finally…

photo of an asteroid orbiting the earth with a view of the sun

✨An asteroid that was discovered in Earth's orbit is about three-quarters of a mile (1.2 km) wide and might ride along our planet for at least 4,000 more years while posing no danger, scientists said. (Reuters)

Named 2020 XL5 and first detected two years ago, it’s one of only two of what are called Trojan asteroids traveling as a companion with Earth.

See you next week!


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