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Weekly Gold & Silver Market Recap – 3/7/2014

GOLD HITS FOUR MONTH HIGH WITH UKRAINE CRISIS

Gold climbed to a four-month high Monday due to growing geopolitical tension. With Russia’s involvement in the Ukraine crisis and potential U.S. intervention, many are comparing the situation to the Cold War. The U.S. dollar fell due to the geopolitical tension. Simon Smith, chief economist at FxPro, said that Gold has “benefitted from the uncertainty … so any bulls with a renewed sense of optimism towards the Precious Metal could have the $1,360 [per ounce level] in their sights. Geopolitical concerns have a habit of distorting the markets and in this case they could continue to do so for as long as the Ukraine issue remains in the headlines.”

GEOPOLITICAL TENSION CONTINUES

Russia denied reports Monday that it gave an ultimatum to Ukrainian troops to leave the Crimea region or face a “military storm.” The U.S. and the European Union (EU) are reportedly readying sanctions against Russia should it continue its involvement in the situation. Travel bans and asset freezes are reportedly on deck as sanctions from the U.S. and EU. Jane Foley, analyst at Rabobank International, said, “The world now faces a new round of geopolitical tension with potentially very high stakes.”

EMERGING MARKETS TO DEFINE GOLD’S COURSE

Precious Metals prices went relatively unchanged Tuesday as investors continued to track the situation in Ukraine. The Gold price lowered overall because of profit-taking, according to analysts at India’s ICICI Bank. James Steel, chief Precious Metals analyst at HSBC, wrote, “We would argue that physical demand trends in the emerging world will largely define Gold’s price movements this year. China alone is absorbing the equivalent of half the world’s Gold mine production. A possible recovery in Indian demand, should the authorities reduce Gold import tariffs, is potentially supportive.”

PRIVATE-SECTOR JOBS REPORT SUPPORTS GOLD

The Gold price increased from its lows Wednesday once the U.S. private-sector jobs report showed weaker than expected data. Talks that Washington and Moscow are attempting to resolve tensions in Ukraine left little support for Gold as a safe-haven asset, which explains why prices did not jump from the poor jobs data. Jan Skoyles, head of research at The Real Asset Co., said, “as we have seen in the last few years, Gold tends to trade lower in the days prior to the jobs data … [and] following the cooling of the Ukraine situation (thanks to [Russian President Vladimir] Putin’s comments) all eyes will be back on U.S. economic data.” Wednesday the market highly anticipated the U.S. monthly jobs data, which was due Friday.

U.S. MINT RELEASING PLATINUM EAGLES

The U.S. Mint released great news for Platinum investors, as they will resume minting Platinum American Eagle coins beginning March 10. The Mint has been out of the Platinum Eagle program for four years, but with growing market interest it has been brought back to life, and APMEX is currently pre-selling these highly anticipated coins. The demand for Platinum has spiked due to higher auto demand in the U.S. and Asia along with supply uncertainties caused by numerous strikes in South Africa, home to the top Platinum producers. Precious Metals have been outstanding in 2014, with Platinum rising eight percent, Gold increasing 11 percent and Silver gaining nine percent.

GOLD TRADES IN TIGHT RANGE AS INVESTORS AWAIT FURTHER JOBS DATA

Gold traded slightly higher Thursday, rebounding from morning lows as investors continued to eye the Ukrainian crisis and Friday’s monthly U.S. jobs data. Gold has been range-bound over the last few sessions as domestic and global news has failed to influence the yellow metal from breaking out of current levels. “Precious-metals prices are “hanging” around, with little new news to create a catalyst either way,” one expert, said. “The Ukraine situation, although calmer, continues to create a ‘fear’ floor as a hedge against a ‘what if Putin does this’ scenario.”

JOBS REPORT EXCEED LOW EXPECTATIONS

Precious Metals prices fell Friday after the release of the U.S. Labor Department’s monthly nonfarm payrolls report. Economists expected an additional 140,000 jobs in February, while in reality the report showed 175,000 jobs were added. The unemployment rate, however, rose to 6.7 percent. The Labor Department explained the uptick by saying that more people entered the workforce in search of jobs, but not all of them found one.

U.S. stock futures jumped after the release of the jobs report, and it seems it was merely a reaction to lowered expectations, which were exceeded by the jobs report. Bruce McCain, chief investment strategist at Key Private Bank, said early Friday, “The expectation is that [the jobs report] is going to be disappointing, which is pretty reasonable given the still-miserable weather over a good portion of the country.” Jim Reid and Anthony Ip of Deutsche Bank also warned that the Ukraine situation could still be a factor in markets, writing, “The crisis doesn't look like its over, even if markets have become a bit more sanguine about the endgame.”

At 5:15 p.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,341.50, Down $12.30.
  • Silver, $20.92, Down $0.69.
  • Platinum, $1,486.10, Down $2.70.
  • Palladium, $783.30, Up $2.10.

For more APMEX reviews of daily and weekly Precious Metals market activities, visit our News and Commentaries page.

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Disclaimer:
APMEX’s ‘Market Reports’ provide our readers with a review of spot price activity and some of the factors that may be affecting the market for precious metals, three times during the trading day. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The "News and Commentaries" are not intended as a comprehensive discussion and there may be other factors that may be affecting the financial marketplace. These "News and Commentaries" are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, to purchase or to sell any precious metal product. All orders, all purchases and all sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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