After a week where Gold has struggled, the yellow metal rebounded on Friday. Speculation surrounding the taper of Fed stimulus measures lent weight to lower Precious Metals prices along with signs of domestic economic improvement. However, Gold and Silver were able to cap off the week with a strong rally as tension in Ukraine escalated, causing investors to seek out the safe haven appeal of Precious Metals.
Gold and Silver prices shot higher on Friday morning trading on increased tensions in Ukraine. Thomas Capalbo of Newedge said, “Going into the long weekend with London out on Monday, there was short-covering and good physical buying after a knee-jerk selloff earlier after the job data.” Gold rose more than one percent, while Silver rose nearly three percent.
The U.N. Security Council was in the middle of an emergency meeting, called this morning after Ukrainian helicopters were shot down by Pro-Russian rebels on Friday. Ukraine had attacked a separatist-held region, and Russian President Vladimir Putin condemned the attack. The U.S. jobs report released early Friday morning took a back seat to these geopolitical tensions, and U.S. stocks fell on the news.
Though Gold fell this week, Silver had a more substantial pullback as the metal fell below $19 an ounce. Silver benefits from industrial demand more than Gold, and record buying of Silver from manufacturers of jewelry all the way to solar panels did little to boost the price. “The industrial driver can help, but I don’t think it’s as influential as the investor,” Robin Bhar, head of metals research at Societe Generale, said. “Investors were bullish silver because gold was in a bull market. Now that we have gold in a bear market, there’s less enthusiasm coming from investors.” As Gold and Silver hope to gain a foothold at some point following several sessions in the red, investors looked to Friday’s all-important government jobs report to see if employment recovery is enough to put further downward pressure on Precious Metals.
The Gold price fell slightly on Tuesday as strength in U.S. equities and anticipation of another round of Federal Reserve stimulus tapering weighs on the yellow metal. “The equities continue to impact Gold prices,” Frank McGhee, head dealer at Integrated Brokerage Services LLC, said. “Also, people are waiting to hear from the Fed.” Gold received support during April as geopolitical tensions surrounding Russia and Ukraine influenced investors to seek Gold’s safe-haven appeal. Though analysts and investors alike predict ongoing commitment to the current pace of monthly asset-purchase reduction, little downside for Gold and Silver is expected following tomorrow’s summit conclusion. The Fed’s monetary strategy has already been priced in to Precious Metals markets and a taper announcement will likely not have the significant impact on prices that it has in the past.
Though Precious Metals prices experienced a rebound to erase losses from the rest of the week, Gold continues to hover around the $1,300 mark. Investors will continue to eye geopolitical tensions and signs that the domestic economy is truly growing in coming weeks. Also, the looming fear of a stock market correction continues to pervade market literature. A significant drop in stock indexes would most likely force Precious Metals prices higher.
At 5 p.m. (ET), the APMEX Precious Metals spot prices were:
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- Gold, $1,302.40, Up $17.00.
- Silver, $19.54, Up $0.45.
- Platinum, $1,440.10, Up $12.60.
- Palladium, $812.90, Down $2.30.
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