Gold fell more than 2% on Tuesday, sinking below $1,800 support level. This drop in price was partly caused by a sharp rally in the U.S. dollar and rising interest rates, which created short-term investor disinterest in the metal, in spite of growing fears of a looming recession and/or stagflation scenario.
However, the price of gold bounced back on Thursday, after a break in the dollar’s rally, but analysts warned the relief was likely to be temporary.
Here’s how the prices of gold, silver, platinum, and palladium have changed over the past week:
Inflation in Turkey hit almost 79% in June, the highest level the country has seen in 24 years, surpassing forecasts. (CNBC)
Due to the Russia-Ukraine war, high energy and food prices, and a sharp depreciation of the Turkish lira, 84 million Turks have been severely impacted by rising consumer prices, with little hope for improvement in the near future.
Read our SPOTLIGHT to learn more about inflation in Turkey and what it feels like in real life.
According to the chief economist at brokerage firm Nomura Holdings, many of the world's top economies will enter a recession within the next year as central banks tighten monetary policy aggressively to combat rising inflation. (CNBC)
“We have been pointing for several months about the risks of a recession and we’ve bitten the bullet. And now we have many of the developed economies actually falling into recession,” he said.
In addition to the United States, Nomura anticipates recessions in the Eurozone, the United Kingdom, Japan, South Korea, Australia, and Canada next year.
To control the spiraling inflation that has severely devalued the local currency, Zimbabwe's central bank will start using gold coins as a store of value. (The Guardian)
The coins will be sold starting on July 25 in local currency, US dollars, and other foreign currencies for a price based on the current global gold price and the cost of production, according to a statement from the governor of the central bank, John Mangudya.
The Victoria Falls-inspired Mosi-oa-tunya coin can be exchanged for cash and used for both domestic and international trade, according to the central bank.
Top cryptocurrency miner Core Scientific Inc. sold the majority of its Bitcoin holdings in June as the price of digital assets plunged, putting financial pressure on even the industry's biggest players. (Bloomberg)
According to the company's monthly update, Core Scientific sold 7,202 mined coins for $167 million last month, causing a 79 percent decline in its balance sheet's holdings of Bitcoin.
Crypto markets have seen heavy losses, with investors worried about high inflation and Federal Reserve rate hikes. Some analysts say the bitcoin price could even drop to $13,000.
Raising interest rates to subdue demand - and therefore inflation - is not the right solution as high prices have been mainly caused by supply chain shocks, MBMG Group managing partner Paul Gambles says. (CNBC)
“Supply is very difficult to manage, we are finding across a whole bunch of industries, a whole bunch of businesses, they’re having very different challenges just turning the taps back on,” he said.
During Covid lockdowns, international producers and suppliers have been unable to efficiently produce and deliver goods to customers. Additionally, more recent sanctions against Russia have also curtailed supply, primarily of commodities.
“And the Fed are the first ones to put up their hands and say monetary policy can’t do anything about supply shock. And then they go and raise interest rates,” Gambles added.
Read our SPOTLIGHT to learn everything you need to know about supply chain chaos and its impact on the global economy.
What else is happening
Ukraine Latest; Russia narrowly dodges deeper recession; Turkey discusses grain transit; the Group of 20 ministerial gathering is taking place in Bali this week; Boris Johnson to resign. (Bloomberg)
- Russian forces are attempting to strengthen their tactical position on the Slovyansk axis in the Donetsk region. In light of the escalating Russian attacks, regional governor Pavlo Kyrylenko has urged residents of the eastern Ukrainian towns of Kramatorsk and Slovyansk to leave.
- Due to rising oil production that has reduced the impact of international sanctions over its war in Ukraine, Russia appears to be on track for a much shallower recession than many initially predicted.
- Turkey is attempting to reach a deal in the upcoming days on the transportation of Ukrainian grain.
- During a forthcoming summit in Bali, US Secretary of State Antony Blinken intends to have an open discussion about the Ukraine war with his Chinese counterpart but has no planned meeting with Sergei Lavrov, the foreign minister of Russia.
- U.K.'s Johnson is resigning as the leader of the Conservative Party, but is likely to remain PM over the summer.
- The decision to step down comes after more than 50 Tory MPs quit the Government in a period of less than 48 hours.
As they search for the universe's fundamental particles, CERN researchers using the Large Hadron Collider (LHC) have found three subatomic particles they had never seen before. (Reuters)
The Higgs boson particle, along with its associated energy field, is thought to have been essential to the formation of the universe following the Big Bang 13.7 billion years ago. It was discovered by the 27-kilometer-long LHC at CERN.
See you next week!