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Gold price is ready for 'substantial' move as inflation gets worse, war looms in Europe - Gary Wagner

Kitco News

(Kitco News) - Tensions in Eastern Europe, as well as inflation that is unlikely to dissipate soon, are forces that will push gold to move "substantially", said Gary Wagner, editor of

Importantly, if war does break out, a sustained geopolitical crisis would push both the U.S. dollar and gold up together, Wagner told David Lin, anchor for Kitco News.

"We had multiple days in the last couple of weeks in which we saw safe haven plays into the dollar and gold concurrently. So while it would pressure gold, it would hold back the rise but [would not] necessarily be so strong that gold moves gold with that adversity," he said. "I think that dollar strength and gold can move in tandem during that kind of a conflict, in the same way that U.S. equities and gold move in tandem when you have a highly accommodative Federal Reserve."

Inflation will continue to provide tailwinds for the gold price this year, especially when wholesale prices, as indicated by the producer price index (PPI), remain elevated, Wagner said.

Wednesday, core PPI was reported to be have climbed 6.9% year-over-year.

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"The PPI that came out [Wednesday had] an uptick in it. Obviously, as wholesale prices go up for manufacturers for goods and services, they will inevitably pass those higher prices onto the consumer. Anytime you have the PPI going higher, the first thing that it tells you is that inflationary pressures aren't stabilizing, they're not peaking, they are in fact going to continue to move higher. Add that to the PCE that came out, that is also at a 40-year high, and really what we're looking at is persistent inflation that, I believe, will not go to a target level by the Federal Reserve for at least a year or two years," Wagner said.

For more information on how gold responds to elevated, persistent inflation, as well as Wagner's outlook for the gold price, watch the video above.

Follow David Lin on Twitter: @davidlin_TV

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