Gold and silver are trading sharply higher on Tuesday thanks to a few factors finally working in their favor. For one, recent flare ups in pro-Russian demonstrations in Ukraine are driving safe-haven demand upward while a falling USD is also helping the precious metals market. This week is expected to be fairly light from an economic data standpoint as most of what is scheduled to be made public will likely be overlooked or ignored by metals investors.
The IMF announced today that they were correcting their growth forecasts for G-7 countries and that the UK is expected to be the strongest economic performer over the next two years. In both 2014 and 2015 the IMF is expecting to see the UK economy grow by nearly 3% each year. This is a change of pace for many as the UK economy has been somewhat stagnant over the last few years.
Ukraine Not Out Of The News Yet
If you were like most of the investing world, you were probably just about finished giving the situation in Ukraine any attention as the violence and threats of violence have more or less been absent from the news over the course of the past week or so. Having said that, there are new reports alleging that pro-Russian Ukrainians are continuing to take to the streets and protest the Ukrainian government. Despite security forces doing their best to eliminate these demonstrations or at least keep them under control, the situation seems to be very slowly but surely deteriorating. So much so that many people fear Ukraine is on the verge of a civil war. Despite the fact that we are still in the early stages of these new developments, investors have responding by boosting safe-haven demand for precious metals. Because of this new boost in safe-haven demand gold is sitting comfortably above the $1,300 threshold (and rising) while silver is sitting comfortably above the $20 threshold (and also continuing to rise).
We will continue to keep an eye on the situation in Ukraine as it is likely to develop further over the next few days.
Finally, the USD is trading significantly lower during the early morning hours of Tuesday. After making impressive gains over the last few trading sessions, it comes as no surprise that the greenback is feeling a bit of a pullback. Luckily for precious metals, this USD price pullback is only helping push spot values higher. As the rest of this week plays out we will monitor the USD’s price action as it relates to precious metals.
