Gold and silver spot values are attempting to stabilize themselves on Wednesday after both metals experienced hefty losses a day ago. Rising tensions in Ukraine are driving safe-haven demand for gold, but a boatload of other factors are keeping precious metals from making any significant gains. For example, early today yielded a few US economic reports, all of which bested market expectations.
While there is no denying that interest in precious metals is beginning to pick up, other factors are preventing them from capitalizing on this renewed interest.
Violence In Ukraine Increases
Little more than a week ago, the crisis in Ukraine was flying under the marketplace’s radar and was more or less being ignored by a majority of investors. The reason for this was simple, a lack of violence and unrest made investors more readily focus on other, more pressing issues. More recently, however, pro-Russian demonstrators and militiamen have made their presence known along Ukraine’s eastern border with Russia. These pro-Russian paramilitaries stormed buildings, towns, and airfields over the course of the past two weeks. Now, the Ukrainian military is forcibly ousting them from the buildings in which they are occupying. Yesterday saw a few skirmishes break out along the eastern border, an event which many think may boil over into a larger-scale conflict.
If Russia steps in in defense of these Russian nationalists in Ukraine, there is no saying where the crisis will head. As it stands, the investing world is keeping a close eye on anything and everything developing out of Ukraine’s east. Russia has been silent on recent matters, but many believe that silence will be broken soon in one way or another. Gold and silver, as morbid as this sounds, have responded positively to the pick-up in violence and are being helped out by a renewed interest in safe-haven gold and silver. Having said that, the metals’ spot values are not partaking in much upward movement thanks to a few things working against them.
Wednesday’s Upbeat US Economic Data
There were a few US economic reports due out today, highlighted by the industrial production report for March. Much to the relief of many investors, industrial production in the United States was up by nearly 1% in March. This positive report helped give the US Dollar more strength and is more than likely the main reason behind why precious metals cannot seem to move upward.
As it stands, gold is sitting just barely above the $1,300 threshold while silver fell down below $20/ounce a day ago and is still hovering below that mark, despite marginal AM gains. As the day plays out it will be interesting to see if physical gold and silver purchases as a result of rising tensions in Ukraine will be able to lift spot values.