Gold and silver are trading sharply lower on Tuesday thanks to a technical correction and profit-taking after recent gains. Despite increased tensions in Ukraine driving safe-haven demand for gold and silver forward, safe-haven demand alone was outdone by profit-taking investors. Economic data for this week is expected to be light and devoid of any reports that affect the spot values of gold nor silver too much. Having said that, however, the United States’ retail sales report for March was released on Monday and actually came back beating market expectations. As you might have expected, the retail sales report had little to no impact on the values of gold and silver.
Ukraine Crisis Back On The Front Burner
Up until a little more than a week ago, the crisis in Ukraine was on a one or two week hiatus and investors were almost completely ignoring it. At this time last week, however, there were a growing number of reports streaming in claiming that pro-Russian demonstrators were attempting to take over buildings and towns throughout Ukraine. The military was dispatched shortly thereafter, but has not done much in the way of actually dispelling the demonstrators. Instead, the Ukrainian military gave the demonstrators a now expired ultimatum and have still done nothing. The fear is that if the Ukrainian military takes action against seemingly unarmed demonstrators Russia will react with some sort of force. At this point it is still unclear how the rest of this week will pan out, but it is fairly certain that safe-haven demand for gold and silver will continue to be on the rise.
Adding the list of problems facing Ukraine are new reports alleging that Russia rigged the Crimea vote. As is the case with most everything Russia does to Ukraine, it will likely be met with no reaction.
Finally, European Central Bank president Mario Draghi was quoted as saying that the ECB is on the verge of initiating new monetary stimulus measures in order to augment recently growing inflation concerns. Draghi’s statements worked to drive down the value of the euro currency while simultaneously propelling the greenback forward.
As we head into the latter stages of the week it is clear to see that a majority of investors will be paying attention to the ongoing crisis in Ukraine. As the chance for violence grows, so too will the number of investors who are closely analyzing any and all developments out of Eastern Europe.
