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

Gold and silver prices rose on Friday as investors sought safe havens following remarks from Russian President Vladimir Putin.

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

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

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

Gold and silver price movements

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Gold rose 1.15% to $2,330.67 an ounce as of 6:50 a.m. ET, while silver rose 0.98% to $29.25 an ounce.

This increase reflects growing market uncertainty and the attractiveness of precious metals as safe investments amid geopolitical tensions.

Weekly gain for gold on the back of 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 that suggests easing price pressure.

Optimism around a potential rate cut by the Federal Reserve boosted gold prices, which rose 0.5% on the week. However, the gains were moderated by the absence of significant central bank purchases, particularly from China.

Speculation about Fed rate cuts supports gold

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Investors are closely watching statements from Federal Reserve officials, many of whom expect two interest rate cuts this year as inflation trends toward the Fed’s target. This speculation has provided support to gold prices.

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

Inflation data and Treasury bond yields

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U.S. producer prices unexpectedly fell 0.2% in May, falling below economists’ expectations and pointing to slowing inflation.

This follows a colder-than-expected consumer price index (CPI) report earlier in the week, which raised hopes for a Fed rate cut in September.

As a result, the yield on the 10-year US Treasury bond fell to 4.227%, while the 2-year Treasury bond 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 increased to 67%, compared to 63% before the release of producer price data.

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

Market forecast for gold

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

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 persistent weakness in inflation.