Gold and silver are trading higher today, but are currently lower than mid-morning highs which saw spot gold up nearly $20 while spot silver was up more than 20 cents. Despite gains diminishing a bit, both gold and silver are still in upbeat positions. A risk-averse attitude is slowly but surely emerging among investors who are growing increasingly concerned about the intensifying tensions in Ukraine.
Despite this week yielding very little in the way of US economic data, there was plenty of economic news from elsewhere in the world to talk about. Earlier in the week the marketplace was dealt another disappointing report with regard to China’s manufacturing sector, of which has been seen slowing down and even stagnating over the last few months. April’s manufacturing PMI reading did little in the way of disproving the growing sentiment that the Chinese economy is struggling more and more as the months progress. The Chinese central bank did employ some modest stimulus measures earlier this week, but these moves were made mostly to address issues withing the agricultural sector of the economy. The EU’s PMI reading for April was also due out earlier in the week, but, unlike China, the EU’s PMI improved from March to April. The EU economy has been performing well as of late and is making it very clear that the financial crises of last year are slowly but surely fading to the background.
Ukraine, Russia Continue Tense Standoff
The crisis in Ukraine has been in and out of the news over the course of the past few months, at times catching the market’s full attention while at other times failing to move the market at all. These past two weeks have yielded stories that are causing investors to perk up and pay attention. Armed pro-Russia militiamen have been taking over towns across Ukraine eastern half and are further intensifying the unrest in the country.
Earlier in the week, the Ukrainian military met these Russian rebels with force in an attempt to oust them from the many towns and buildings which they have seized control of. The military was succeeding to some extent but was only working to make the entire crisis significantly more violent than it had been before. After hearing of the deaths of a few of the pro-Russia militiamen Russian officials have warned that any further attacks on Russians in Ukraine will be considered the same as an attack on Russia itself. This threat alone was enough for Ukraine’s interim government to tell the military to cease any and all operations against rebel forces. As we head into the weekend investors are increasingly uncertain as to what direction the crisis in Ukraine will head in. There is a large fear that an increased Russian military presence along its border with Ukraine will soon be more than just a symbolic threat and that widespread violence may be inevitable. This uncertainty is helping drive safe-haven demand which is, in turn, boost spot gold and silver. There is no saying whether or not safe-haven demand alone will be enough to keep spot values propped up, but as of now safe-haven demand is about the only bullish factor working in precious metals’ favor.