So far this week has been one of ups and downs for precious metals, making large gains one day only to concede those same gains a day later. Today, spot gold and silver are trading up, but only slightly. The reason for today’s gains can be directly attributed to a sell-off of the USD in the wake of hawkish statements made by the president of the European Central Bank. While it may seem confusing that the president of a central bank in a country other than the United States has the power to affect our currency, it makes much more sense when investors realize it is really only a surging euro that is putting pressure on the USD.
The crisis in Ukraine is still ongoing, but compared to last week has calmed down significantly. Diplomats from a number of nations, including the United States, are in Europe and have been attempting to formulate peaceful resolutions to a situation that is and has been on the verge of escalating into some type of armed conflict. We will continue to monitor the situation in Ukraine over the course of the next few days and the weekend as it stands the chance to evolve considerably in a very short amount of time.
Tensions In Ukraine, USD On The Decline
As the collapsed government of Ukraine looks to piece itself back together, a number of obstacles are making that process much more difficult than it needs to be. Earlier this week it was reported that Russian soldiers seized border posts in the southern region of Ukraine known as Crimea. In most any other country, the seizing of border posts by a foreign nation is an unadulterated act of war, but because Crimea is populated by an overwhelming majority of ethnic Russians, the presence of Russian military personnel is none too unfamiliar. Still, the actions of Russia earlier this week looked like, to many, the beginning stages of what could have turned into an all-out war between the two neighboring countries. As tensions in and around Ukraine rose, the risk-appetite exhibited by worldwide investors declined and the safe-haven demand for precious metals picked up considerably.
Since Monday, however, tensions have taken about 10 steps backwards as the situation seems more and more like it is calming down. Russian troops have since returned to their bases and the world has seen visible signs of attempts at peaceful resolutions by everyone involved. As the tensions declined in Ukraine, the spot values of gold and silver did too due to an increased appetite for risk by worldwide investors. Today, risk-appetite is still fairly high, but because the USD is declining in value, interest in precious metals is picking back up too.
As we look ahead to the last few days of the week, investors will be anxiously awaiting a few pieces of key employment data from the United States. After a few consecutive months of sub-par data investors will hope to see a change of pace and see the employment numbers beat market expectations.