Weekly Digest: EU Inflation Runs Hot, Ukraine Peace Talks


4 minutes read

Mar 31, 2022

soaring Spain and Germany inflation represented in a picture of cartoon man blowing a yellow balloon with a dollar sign

31/03/22: European inflation soars to new heights, Russia resumes gold purchases, no breakthrough seen in Ukraine war despite renewed peace talks. And more.

Investment news

Geopolitical risks and high inflation continue to be the main drivers for precious metals.

Here’s how the prices of gold, silver, platinum, and palladium have changed over the past week:

Gold dropped 0.84% to $1,926.91 an ounce, silver fell 1.66% to $24.69, platinum decreased 3.06% to $988.32, while palladium was down 12.27% at $276.27.

changes in precious metals prices over the past week

“Gold traders are balancing out with potential for further gains based on geopolitical risk and possibly inflation, and the dangerous outlook for gold holdings with rising interest rates, and the net result has once again been that we’ve returned to the middle of the trading range,” said Michael McCarthy, chief strategy officer at Tiger Brokers. (Reuters)

European inflation running hot or welcome back to the 19070s: German inflation hits 30-year high at 7.3% in March, a record high since the country’s reunification in 1990. Spanish inflation soared to 9.8%, the highest rate since 1985 and up from 7.6 percent in February. (Politico, DW).

"Since Russia's attack on Ukraine, the prices of natural gas and mineral oil products have markedly increased again and have had a considerable impact on the high rate of inflation," the German federal statistics office said.

A graph showing consumer prices rise in Germany between 1997 and 2022.
A graph showing consumer prices rise in Germany between 1997 and 2022.

Read our SPOTLIGHT to find out how high inflation can impact the price of gold and precious metals.

Online precious metals dealers have seen a skyrocketing gold demand since the start of the war in Ukraine as investors were looking for ways to protect their wealth from the geopolitical crisis and high inflation. (Le Revenu)

“We have doubled our sales between February 24 and March 24,” Alessandro Soldati, CEO of GOLD AVENUE, told AFP.

Read our SPOTLIGHT to learn why investor gold demand is booming right now.

Russia sets a fixed price for gold as it resumes official bullion purchases from local banks. The move comes after the bank suspended its gold purchases due to a surge in precious metals demand for regular consumers. (Kitco)

The central bank will now pay a fixed price of 5,000 roubles ($59) per gram between March 28 and June 30. This is below the current market value of around $68. According to the bank, the resumption in gold buying will ensure uninterrupted production of local gold.

Oil prices jumped by more than $4 on Wednesday driven by tight supply and the growing prospect of new Western sanctions against Russia. (CNBC)

Brent crude futures went up $4.09, or 3.7%, at $114.32, regaining a 2% loss in the previous trading session.

Deputy Prime Minister Alexander Novak has said earlier a "rejection of Russian oil would lead to catastrophic consequences for the global market.”


Putin might have just realized “war is hell” and expensive.(Bloomberg Opinion)

“One question I get repeatedly these days: What is wrong with the Russian military? Many in the West had a mistaken belief that the Russian war machine was a rough match for the North Atlantic Treaty Organization, and they are surprised at how much trouble the massive force is having subduing a much smaller and less-equipped neighbor, Ukraine,” James Stavridis writes.

Read our SPOTLIGHT to see how the Russia-Ukraine conflict could impact your savings.

Russian President Vladimir Putin giving a speech after Russian troops invaded Ukraine on Feb 24

What else is happening

Russia and Ukraine negotiators met at Istanbul on Tuesday in what Ankara called the most significant progress in Russia-Ukraine peace talks to date. (The Guardian, Reuters)

In Ukraine’s framework for peace there was a demand that it stayed neutral with its security guaranteed by third-party countries including the U.S., the U.K., France, Turkey, Poland and China.

The Kremlin said it welcomed the fact that Kyiv has set out its demands for an end to the war in Ukraine in a written form, but stressed there was no sign of a breakthrough yet.

Read our SPOTLIGHT to see how the current geopolitical tensions could affect the global economy and the price of gold.

Failure to address ongoing energy issues might push some parts of the world into poverty and stagnating the global economy, said the United Arab Emirates Energy Minister Suhail Al Mazrouei. (CNBC)

“We could end up in a situation where energy affordability becomes an issue and that would definitely lead ultimately to poverty, and ultimately could lead to a stagnation of the world economy. We are trying, but we cannot be blamed for everything – we are doing our best,” Al Mazrouei said.

Growing energy prices have caused inflation to soar around the world, triggering cost of living crises across both developed and emerging economies.

And finally…

Several dome-shaped ice volcanoes that are not similar to anything else known in our solar system have been identified on Pluto using data from NASA's New Horizons spacecraft. (Reuters)

"The combination of these features being geologically recent, covering a vast area and most likely being made of water ice is surprising because it requires more internal heat than we thought Pluto would have at this stage of its history," scientists said.

 See you next week!


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