Weekly Digest: Eurozone Recession, Ban on Russian Gold


4 minutes read

Jun 30, 2022

the Eurozone is facing a mild recession at the end of 2022 as shown in the picture of the EU flag and the white arrow going down

29/06/22: Morgan Stanley sees a mild recession coming to the Eurozone this year, G7 countries agree to ban gold imports from Russia, German inflation eases. And more.

Investment news

The gold price was mostly quiet on Thursday but its outlook is mostly clouded by top central banks adopting aggressive policies to fight runaway inflation.

According to analysts, gold has also been taking cues from dwindling sentiment in other commodities.

Palladium rose as much as 6.2% on the news that the U.K. sanctioned Vladimir Potanin, Russia’s richest man and the president of MMC Norilsk Nickel PJSC, which is one of the world’s largest producers of nickel, palladium and copper. (Bloomberg)

Nornickel doesn't sell much of its goods in the UK; it sells them primarily in the U.S., China, and the E.U. Still, the U.K. is home to the London Metal Exchange, which sets global metals prices.

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

a table showing how the prices of gold, silver, platinum and palladium have changed over the past week

European stocks opened lower on Thursday as investor worries about the state of the world economy remained. (CNBC)

All sectors were in the red as the pan-European Stoxx 600 index started the day 0.9 percent lower.

In the meantime, as the S&P 500 gets ready to wrap up its worst first half in decades, U.S. stock index futures were unchanged during overnight trading on Wednesday.

The G7 is planning to announce a ban on new imports of gold from Russia, which analysts saw as a “largely symbolic” move when it comes to the gold price. (CNBC)

“While gold prices reacted positively to the news, we see a limited fundamental impact of a ban. This is due to the low relevance of supply when it comes to the formation of gold prices,” Carsten Menke, an analyst at Julius Baer Group Ltd. 

G7 countries are planning to ban the imports of Russian gold as shown in the picture of a vault with with the Russian flag filled with gold bars

Euro area facing recession: In light of decreased energy supplies from Russia, Morgan Stanley economists said they now anticipate the euro area to enter a mild recession in the fourth quarter of this year. (Bloomberg)

In a study released on Wednesday, economists predicted that the economy would shrink for two quarters before starting to grow again in the second quarter of 2023 fueled by higher investment.

Read our SPOTLIGHT to see what the risk of a recession could mean for investors.

Unexpectedly, German inflation decreased as a result of temporary government relief measures that relieved the strain that a record price increase had placed on both households and businesses. (Bloomberg)

Reduced fuel taxes and lower public transportation costs contributed to a slowing of consumer price growth from 8.7% in May to 8.2% in June.

Here’s all you need to know about soaring inflation in Europe.

Inflation in Germany has unexpectedly eased due to the government’s relief measures, while the Euro area is facing a mild recession as shown in the picture of he German and EU flags

For the first time in more than a century, Russia defaulted on its international bonds as a result of broad sanctions that effectively cut off the nation from the global financial system and rendered its assets untouchable, the White House and Moody's credit agency said. (Reuters)

The Kremlin has denied the allegations, accusing the West of driving it into an artificial default.

Dmitry Peskov, a spokesman for the Kremlin, stated that it was "not our problem" that payments had been stopped by clearinghouse Euroclear as a result of Western sanctions against Russia.

Oil prices rose for the fourth straight session on Wednesday as tight supply worries outweighed concerns about a slowing global economy. (Reuters)

Brent crude futures for August were up to $118.85 a barrel. Prices increased as the G7 nations decided to look into options for setting price caps on Russian oil exports.


Inflation to boost the price of gold: According to Alastair Still, CEO of GoldMining Inc., concerns about inflation will push the gold price up. (Kitco)

“I think the gold price is going to go higher. We are all talking about inflation. That’s on the tip of everyone’s tongues these days. And I think that as the markets get turbulent… we’ll seek out gold as a safe haven,” he said.

Here’s what you can do right now to fight rising inflation.

What else is happening

UK appoints a Director-general of winter resilience. As Russia's conflict with Ukraine threatens to exacerbate Europe's energy crisis, the UK appointed an official to make sure it can keep the lights on this winter. (Bloomberg)

Jonathan Mills, who had previously served as the government's director of energy strategy, assumed the position earlier this month.

“Energy security is an absolute priority,” the Department for Business, Energy & Industrial Strategy said after officials warned that, in the worst-case scenario, around 6 million British households could experience power outages this winter as a result of Russia cutting off gas supplies to Europe.

NATO has made an official proposal to Sweden and Finland to join the alliance after Russia’s invasion of Ukraine, as shown in the picture of the flying flags of NATO, Sweden and Finland

NATO formally invited Sweden and Finland to join the alliance in a historic move on Wednesday. After initial resistance from Ankara, NATO and Turkey came to an agreement to accept both countries' membership applications. (CNBC)

The alliance reiterated its condemnation of Russia's invasion of Ukraine at the summit, which is arguably the most significant gathering of the alliance in recent months and possibly years. The alliance also promised to strengthen its defenses in Europe and called China as a "challenge" to its interests.

And finally…

Meet a Zombie Star 🌟: A star that not only survived a stellar explosion known as a supernova that ordinarily should have been certain death but also emerged from it brighter than before the blast has been spotted by astronomers in a relatively nearby galaxy. (Reuters)

Scientists discovered a star that has survived a stellar explosion known as supernova and is brighter than before it exploded

"We were quite surprised that the star itself had not been destroyed but had actually survived and is brighter than before it exploded," said Curtis McCully, a senior astrodata scientist at California-based Las Cumbres Observatory.


See you next week!


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