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State Street gold expert thinks a new high beckons for gold

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(Kitco News) - State Street Global Advisors' gold expert George Milling-Stanley sees the price of gold reaching a new high this year. Currently gold is having a bit of a pullback following the geopolitically driven bull run. The gold price today stands at $1937.50/oz but the most recent high stands at $2070.42/oz which was printed on 8th March.

George Milling-Stanley said "I would expect the gains to continue until some sort of settlement of the Ukraine issue is reached, which right now seems a long way distant,"

He went on to say "I would not bet against rising gold prices in this situation," he added, as the invasion added fuel to an already uncertain political and economic environment. State Street Corp. has $3.9 trillion assets under management and manages SPDR Gold Shares, the largest physically-backed gold ETF in the world.

Speaking about central banks Milling-Stanley noted, "Fed Chairman Jerome Powell has made it clear that the Fed will raise rates in a cautious manner in order to avoid triggering a U.S. recession, and that cautious stance has only increased in the wake of the Ukraine invasion."

"History suggests that the gold price frequently goes up simultaneously with interest rate increases," said Milling-Stanley, adding that this is exactly what happened when the Fed raised rates nine times between December 2015 and December 2018, with gold rising 17%, and when the Fed raised rates 17 times between June 2004 and June 2006, with gold going up 57%.

Getting back to the bullish call he said "Given the lessons of history, combined with the current environment of significant levels of uncertainty both economically and geopolitically, I would expect the gold price to continue to rise,"

On the physical side he noted "The strong gains in bar and coin demand around the world last year is increasing fear of rising inflation among individual investors," said Milling-Stanley. "There is no question that gold's perceived role as offering some protection against high inflation is a strong motivating factor for investors, especially in Europe."

When it comes to supply he commented "It is difficult to see a scenario in which the country would suddenly turn round and start selling gold for foreign currencies, which already account for 80% of the country's reserves," according to Milling-Stanley

Back to the point on Russia lastly Milling-Stanley said "Some 95% of Russia's gold reserves are believed to be held in Moscow, and any sales from these stocks would involve transport to an international financial center," Milling-Stanley said. "And all this begs the question of who might act as a counterparty for any potential Russian gold sales, given current international sanctions."

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