Russia Bolsters Financial Defenses with Major Power Play

Gold prices currently sit at $2,660 an ounce this Monday morning, up slightly from $2,650 at the beginning of last week. The consensus of 20 speeches from the Federal Reserve's leadership last week was that another 50 basis point cut in November or December is unlikely.

In global news, Russian President Vladimir Putin is calling to build a new international framework with BRICS allies to combat the dollar's dominance in trade. The BRICS Summit will be held in Kazan, Russia, on October 22nd-24th. Iran, a new member of BRICS and a growing strategic partner of Russia will be in attendance. Western allies are sanctioning both Russia and Iran. Russia's forex reserves in dollars and euros have been frozen under Western sanctions. These sanctions have seriously hampered Russia's financial system and cut the country from international capital markets.

Russia has been making big moves in the precious metals market, with 51.5 billion rubles (around $538 million) earmarked annually for precious metals such as gold, silver, platinum, and palladium through 2027. Russia's announcement to ramp up its daily gold purchases from $13.5 million to $93 million (1.2 billion rubles to 8.2 billion rubles) using windfall oil and gas revenue could have significant implications for the global gold market. Russia's decision to add silver to its reserves could also profoundly impact the market. This strategic move, which distinguishes Russia from most other central banks primarily focused on accumulating gold, could be a key driver in pushing silver prices to $50, especially if other central banks follow suit.

After last week's surprise data and recent revisions on employment and inflation, expect particular scrutiny on reports by the Federal Reserve before their November 7th meeting on interest rates. The CPI data on inflation was hotter than expected (September), suggesting they may have moved too much on the recent 50 basis point reduction.