The PRICE of GOLD set new all-time records for Euro, UK and Japanese investors on Thursday even as trading costs rose for leveraged speculators, but snapped its winning streak in Chinese Yuan while going sideways against the rising US Dollar for a 2nd day after Russia destroyed a major energy plant in Ukraine and Washington warned of an 'imminent' attack by Iran on Israel.

 

Oil and gas prices jumped, global stock markets fell, and longer-term borrowing costs rose further in the bond market.

 

"[While] there are many valid and compelling reasons to be long gold, carry cost [in Comex gold futures is] going higher with odds of rate cuts diminishing," notes one long-time bond trader, saying it has now reached "5.6%-ish annualized".

 

"Buyers [clearly] don't care about funding cost, but worry about geopolitics," agrees derivatives platform Saxo Bank's analyst Ole Hansen, pointing as well to the "out-of-control rising US government debt pile and now also reaccelerating inflation."

 

Yesterday's surprise pop in US consumer price inflation data spurred the sharpest 1-day rise in Treasury borrowing costs since the disastrous UK 'mini budget' debacle of September 2022, according to Bloomberg.

 

Yields then rose again Thursday on both conventional and inflation-protected government debt, taking the real rate offered by 10-year US TIPS up to the highest since late-November at 2.17% per annum.

 

The gold price was then trading at $2013 per Troy ounce, more than twice its level of New Year 2009, when the interest rate on US government debt had previously been this high above the bond market's inflation expectations.

 

 

"I think it's unlikely we would raise interest rates from here but I don't want to rule it out if inflation surprises us to the upside – that's always possible," said Minneapolis Fed President Neel Kashkari earlier this week, repeating his view that the US central bank may make no 2024 rate cuts to overnight interest costs this year.

 

"ECB interest rates are at levels that are making a substantial contribution to the ongoing disinflation process," said European Central Bank president Christine Lagarde today, presenting the 20-nation monetary authority's latest 'no change' decision and vowing that "our future decisions will ensure our policy rates stay sufficiently restrictive for as long as necessary" to keep inflation falling closer to the 2.0% target after leaping to 4-decade highs above 10% following the start of Russia's all-out invasion of Ukraine in early 2022.

 

Gold priced in Euros cost €2183 at 3pm in London on Thursday, its 13th new benchmark high in the past 3 weeks.

 

The UK gold price in Pounds per ounce fixed around £1867, the 12th new all-time high across those 14 trading days.

 

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Brent crude meanwhile rose back above $90 per barrel, nearing last week's 6-month highs, and natural gas prices jumped more than 5% for the day after Russia "completely destroyed" the Trypillya Thermal Power Plant near Ukraine's capital Kyiv and also attacked 2 of Ukraine's underground gas storage facilities just a day after state-owned operator Naftogaz said it's working to persuade European energy giants such as Germany's RWE, Norwegian Equinor, and French TotalEnergies and Engie to hold more stock in its tanks.

 

US President Joe Biden meantime vowed "ironclad" commitment to supporting Israel against what Washington intelligence reports overnight called an "imminent" threat of attack by Iran following Israel's assassination last week of senior commanders from Tehran in neighboring Syria.

 

Even so, Israel's Prime Minister Benjamin Netanyahu is making a "mistake" in his handling of Gaza, Biden also said, as last week's killing of 7 charity workers from the World Central Kitchen (WCK) in an Israeli airstrike was followed by a vehicle from the United Nations Children's Fund aid agency (UNICEF) being hit by live fire from the IDF while waiting to enter northern Gaza.

 

"We set a simple principle: Anyone who hits us, we hit them," Netanyahu said on a visit to an Israeli fighter-jet airbase today.