Gold Spot Price Open: $1,288
Gold Spot Price Close: $1,289
Change in Gold Spot Price: +$1
Silver Spot Price Open: $20.25
Silver Spot Price Close: $19.80
Change in Silver Spot Price: -$0.45
Precious metals traded downward for a majority of the day, but were seen rallying a little bit by the time US markets closed. When all was said and done, gold ended up gaining a dollar or so while silver declined by more than 40 cents. Platinum and palladium both began the day edging downward and both lost roughly ten dollars.
US Equities Fall Amid Ukraine Tensions
Shortly after the day began today, US equities were being pressured by some weaker economic data from Target Corp. Officially, Target announced that second-quarter profits fell far short of expectations. Shortly thereafter, US equity markets were seen edging sharply downward. Things only got worse for stocks once it was made public that a Polish foreign minister claimed that Russian troops were massing on the border with Ukraine and are poised to either put pressure on or invade the country.
As has been the case lately, the situation between Russia, Ukraine, and the West has been drawing a lot of attention from the investing world. Violence between pro-Russian rebels and Ukrainian military forces has intensified in recent days, and with Russia threatening to potentially join the situation, it only makes sense that investors are taking notice.
As you could have probably guessed, the increased attention being placed on tensions in Ukraine was a major contributing factor in precious metals’ late day rally of sorts.
Tame ECB Meeting Expected
The European Central Bank is scheduled to meet for their monthly policy meeting on Thursday, but most market analysts are not expecting much to come of it. The reason for this is due to the simple fact that accomodative monetary policies were just announced and introduced roughly two months ago, and the full effects have yet to be realized. If you can recall, the June ECB meeting yielded interest rate cuts as well as measures aimed at increasing lending from European banks.
Christopher Vecchio of DailyFX made it clear that we should not expect much from this week’s ECB meeting when he was quoted as saying that “this is a weird in-between meeting where the ECB is still conducting it stress tests (on banks) and collecting data from those results. There has simply not been enough time passed since the June measures to say whether or not the accelerated pace of easing has had the wanted or desired effects.”
In July, EU inflation fell on an annualized basis to .4%; a number that is well below the 2% goal set forth by the ECB.
Dollar Continues to Trend Upward on Upbeat Economic Data
It’s been a recurring theme lately, but the US Dollar trended upward for a majority of the day on the back of some better than anticipated growth in the US service sector as well as an unexpected increase in factory orders.
European data made public before US markets even opened also showed some steady growth in the EU service sector. By day’s end, however, the euro currency had fallen to a more than 9 month low against the USD.
The USD Index, which measures the US Dollar against a number of rival currencies, hit a 10.5 month high of more than 81.6. Since the beginning of July, the greenback has been on an impressive rally against the euro and a number of other currencies. As US economic data continues to show signs of improvement at the same time the Fed is tightening monetary policy, the US Dollar very well might continue to trend upwards over an even more extended period of time.
Wrap-Up
Looking ahead to the next few days, I am certain that the market will continue to focus on rising tensions in Ukraine. If Russia does get involved in the fighting in Ukraine, there is no saying how the rest of Europe and the United States will react. While most are calling this an unlikely turn of events, it is almost a certainty that tensions in the region will remain high for some time to come. As has been the case lately, investors from around the world will continue paying attention to the movement of US equity markets, which have jumped around a lot during the first two days of this week.
