Gold and silver spot values are trading significantly higher today as a result of some turbulent economic data coming from both China and the European Union. US markets are generally quiet today, though equity markets are continuing to feel pressure. In fact, equity markets from around the world were seen selling off at a fairly fast rate today.
Increased risk aversion coupled with safe-haven demand is being credited with providing precious metals with quite a boost this week.
Equities Decline, Par Losses By Day’s End
After recovering a bit on Wednesday, US equity markets took part in a major sell-off shortly after markets opened today. Fueled by weak economic data out of Europe and fears that their sovereign debt crisis might not be completely solved, investors rushed to safety in the form of the US Dollar, US treasuries, and precious metals.
While the afternoon did offer some respite from early morning losses, the day was still pretty rough on US stocks. As you could have probably guessed, today’s weak economic data from Europe also caused sell-offs in European equity markets.
On top of it all, fears with regard to the banking system in Portugal surfaced when it was reported that a company associated with the country’s second largest bank missed debt payments. Portugal’s central bank was quick to defend Banco Espirito Santo SA in the wake of their parent company not making loan payments. In an official statement, the central bank of Portugal was quoted as saying Espirito Santo is fully “protected” in this type of situation. Still, it is clear to see that Portugal, and the rest of Europe for that matter, is on edge with regard to their financial stability.
Violence In The Middle East Spurs Safe-Haven Demand
No more than a week ago, the market’s primary focus was on the Iraqi civil war and its ramifications on the precious metals market. Now, investor attention is still focused on the Middle East, but the epicenter of that focus has shifted to Israel and the Gaza Strip.
In response to recent reports of rocket fire from Palestinian forces, the Israeli military launched an air and rocket offensive on the occupied Gaza Strip. With both sides throwing threats back and forth, this Israeli offensive stands the chance to turn into something a bit more severe. With many nations around the world having a vested interest in the region, it should come as no surprise that the market will continue to pay close attention to Israel, Iraq, and the man other regions of the Middle East experienced increasing amounts of violence as of late.
The last day of this week is expected to be quiet from a US economic data standpoint, but I am sure we will see plenty of investors and market experts continuing to mull over the FOMC’s latest minutes as well as the European economic data and crises that surfaced today.