Gold ends the week higher for the first time in two weeks. Geopolitical tension surrounding the situation in Ukraine remains the main motivator of higher prices this week. The yellow metal has rebounded back above the $1,300 mark as friction between east and west has escalated to its highest level since the Cold War. U.S. equities yo-yoed back and forth between strong upward momentum and selling pressure as stocks end the week lower. The S&P 500 continued to flirt with a new record high as corporate earnings and U.S. consumer sentiment have been the driving forces behind this week’s market behavior.
U.S. stocks traded higher for the fifth straight session on Monday as the S&P 500 looked poised to realize its longest winning streak since October. “The few earnings that we’ve had so far have been coming in pretty well,” John Fox, director of research at Fenimore Asset Management, said. “All the fundamentals still line up that stock prices can go higher. Interest rates are still low, the economy’s getting better.” Investors await further news from the Federal Reserve and signs of ongoing improvement in domestic economic news to gain insight regarding the short-term trajectory of Precious Metals and equities markets.
Gradual improvement in the U.S. economy was shining through to start the week as Gold dipped its lowest level in two weeks. The yellow metal reached a six-month high on March 17. “The physical buyers are also waiting on the sidelines to see if there will be further reduction in prices,” George Gero, vice president and precious-metal strategist at RBC Capital Markets, said.
Precious Metals prices went without change on Wednesday during early-morning trading, as the Gold price floated above a 2-1/2 month low. “We continue to watch Gold between the $1,275 (per ounce) and $1,280 (per ounce) level where key support is still apparent,” Ed Meir, metals analyst at INTL FCStone, said. The U.S. dollar and equities eased, making way for Gold’s advance.
Earnings reports and a disappointing home sales report were the likely culprits for the decline in stocks on Wednesday. Stephen Carl, head equity trader at Williams Capital Group, said, “The market is -- I don't want to say bracing -- but waiting for something to develop one way or the other.” Peter Boockvar, chief market analyst at the Lindsey Group, added, “The U.S. recovery remains in fits and starts.”
Early morning trading saw Gold and Silver prices dive lower on Thursday especially once technical trading kicked in. However, the Gold price spiked on news coming out of Ukraine which indicated tensions were escalating. Reports of the Russian military planning exercises on the Ukraine border sent equity markets lower and safe-haven assets like Gold up. “Traders are taking this threat very seriously and we having seen a hasty change in sentiment on our end,” Naeem Aslam, chief market analyst at AvaTrade, said. “If Russia does follow its plan, then we will anticipate a further sharp selloff across the board for the equity markets and groundbreaking earnings reports from Apple and Facebook may not be able to pull the markets up.”
As Gold rallied from a poor start at the beginning of the week and stocks tumbled from early gains, investors will continue to eye developments in Ukraine for signs of Gold’s short-term trajectory. Stock buyers and Gold investors alike will await further earnings reports and economic indicators to gauge whether this year’s stock rally can be sustained.
At 5 p.m. (ET), the APMEX Precious Metals spot prices were:
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- Gold, $1,305.60, Up $13.00.
- Silver, $19.79, Up $0.04.
- Platinum, $1,424.40, Up $14.80.
- Palladium, $810.50, Up $7.20.
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