Gold Spot Price Open: $1,286
Gold Spot Price Close: $1,306
Change in Gold Spot Price: +$20
Silver Spot Price Open: $19.89
Silver Spot Price Close: $20.09
Change in Silver Spot Price: +$0.20
Precious metals rebounded nicely on Wednesday, fueled by the potential for more violence in Ukraine. When all was said and done, gold was up by more than 20 dollars while silver made gains of around 20 cents. Platinum and palladium fared about the same as silver and gold and ended the day in a better position than where they had started.
Metals Helped By Tensions Across Europe
Precious metals were lifted even before US markets opened today due to the continued devaluation of European equities as well as increased tensions in Ukraine and across Eastern Europe. Today’s major news story initially broke on Monday when it was reported that Russian troops were once again massing upon the country’s Western border with Ukraine. Now, official reports from NATO are saying that more than 20,000 combat-ready troops have been moved to the border region of the country. The overriding concern for many is that Russia will soon invade Ukraine under the pretext of a “humanitarian” mission.
Bill O’Neill of New Jersey-based investment firm LOGIC Advisors described today as being “a safe-haven, flight-to-quality day for gold because of fears in the market caused by lower European stock prices and Putin’s aggressive attitude.” Though Russia has not necessarily made the fighting in Ukraine any worse, many people think it is only a matter of time until they do. For this reason, it is likely that investors will continue paying close attention to every development stemming from the situation in Ukraine going forward.
US Dollar Continues to Make Gains Against Euro
Though this week is expected to be quiet from a US economic standpoint, the EU played host to a few key reports today. Unfortunately, the data was mostly poor and drove the value of the Euro currency to a fresh 9-month low against the greenback. While the USD is performing well against the Euro, the USD Index, which measures the greenback against a basket of currencies, hit an 11-month high today.
Among the poor EU data driving the value of the Euro currency downward was a report from Italy claiming that the country had slipped into a recession during this year’s second quarter. Adding insult to injury was a report from Germany claiming that industrial orders had fallen at the steepest rate in more than 2 years during June. Valentin Marinov, currency strategist for CitiGroup, said that today’s data “is adding to the headwinds of an already weak recovery in the euro zone, encouraging bets on more aggressive European Central Bank easing, weighing on the euro.”
US equities only ended up making marginal gains by the time the day was through, as they too were pressured as a result of increased tensions in Ukraine. In addition to possible Russian military intervention, investors are also reacting to a statement handed down today by Russian president Vladimir Putin with regard to a new ban imposed on all EU, US agricultural products.
Wrap-Up
Looking ahead to the last two days of the week, it has already become clear where the market’s attention will be. With no economic data expected to be released over the last few days, it is likely that investors will continue to analyze the situation in Ukraine as well as the progress of US equities. Stocks began the day performing well, but as the investing atmosphere became a bit more risk-averse they pared early day gains and ended the day down from daily highs.
