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Gold Signals Trouble

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Gold prices signal distrust with Putin and the future of Ukraine. Reuters reports:

Gold rose 1 percent on Tuesday on a sharply lower dollar and as renewed tensions between the United States and Russia over Ukraine burnished bullion’s safe-haven appeal.

The metal was also underpinned by official-sector buying after Iraq’s central bank said it might buy more gold in the
next few months, having bought 60 tonnes over the past two.

Bullion prices have sharply pulled back from a six-month high near $1,400 an ounce in mid-March as geopolitical tensions eased after Russia officials said the country had no intention to invade other parts of Ukraine outside of Crimea.

On Tuesday, U.S. Secretary of State John Kerry accused Russian agents and special forces of stirring separatist unrest in eastern Ukraine, saying Moscow could be trying to prepare for military action as it had in Crimea.

“The unrest in the Ukraine and the escalating rhetoric from the U.S. is creating fear of an armed conflict, so safe-haven demand is definitely driving up gold prices today,” said Miguel Perez-Santalla, vice president of online precious metals exchange BullionVault.

Spot gold was up 1 percent at $1,308.75 an ounce by 3p.m. EDT (1900 GMT), having reached a two-week high of $1,314.43
in earlier trade.

U.S. COMEX gold futures for June delivery settled up$10.80 at $1,309.10 an ounce, with trading volume about 40 percent below its 30-day average, preliminary Reuters data showed.

Technical issues had shut down contracts on CME Group’s Globex electronic trading system on Tuesday afternoon with primarily agricultural and grains contracts affected and no impact on oil or metals.

Bullion also received a boost as the dollar index fell 0.6 percent against a basket of major currencies.

Ukraine has launched what it described as an”anti-terrorist” operation in the eastern city of Kharkiv and said about 70 separatists had been arrested for seizing the regional administration building.

Gold is usually seen as an insurance against risk in times of economic uncertainty or global political troubles.

The next market focus will be the release on Wednesday of U.S. Federal Reserve minutes for the March FOMC meeting.

The rise in bullion comes despite subdued demand in top buyer China, where prices have been at a discount for more than a month. Chinese gold prices have been at a discount to spot prices since early March, leading to lower imports.

Among other precious metals, silver rose 0.9 percent to $19.99 an ounce, while platinum was up 1.1 percent at $1,437.25 an ounce and palladium gained 1.7 percent to $774.10 an ounce.

 

 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.