Today’s AM fix was USD 1,292.75, EUR 939.91
and GBP 766.67 per ounce.
Yesterday’s AM fix was USD 1,292.75, EUR 938.95 and GBP 765.08 per ounce.
Yesterday’s AM fix was USD 1,292.75, EUR 938.95 and GBP 765.08 per ounce.
Gold climbed $8.00 or 0.62% yesterday to
$1,296.70/oz. Silver surged $0.40 or 2.09% to $19.55/oz.
Spot Gold Price in U.S. Dollars, Daily Candle – 2014 YTD (Thomson Reuters)
Gold fell marginally today despite escalating
tension in Ukraine and between the U.S., EU and Russia. Dollar gains
were cited for the fall.
The government in Kiev has been given a
deadline to pay for Russian gas to prevent a supply cut off.
The U.S. is holding a massive nuclear weapons
exercise this week from yesterday May 12 to Friday May 16. It is
being held in coordination with other combatant commands, services,
and appropriate U.S. government agencies, “to deter and detect
strategic attacks,” days after a similar Russian drill.
Eastern Ukraine states voted in a plebiscite to
join Russia but the referendums have been disputed.
Bullion
for immediate delivery declined 0.4% to $1,290.44 an ounce, Singapore
gold traded at $1,292.03 by 2:40 p.m., according to
Bloomberg and their generic pricing. Silver for immediate delivery
declined 0.6% to $19.426 an ounce after yesterday’s gain. Platinum
lost 0.1% to $1,435.75/oz, while palladium slid 0.1% but remained
over $800/oz at $805.61/oz.
Spot Gold Price in U.S. Dollars, Monthly Candle – 8 Years (Thomson Reuters)
The dollar climbed to the highest in a week
versus the yen and traded near the strongest in a month against the
euro. Data today is forecast to show U.S. retail sales rose for a
third month. A worse than expected sales number should see gold make
gains and a better than expected number may see gold fall.
Gold has rallied 7.5% this year, partly due to
safe haven demand as tensions rise between Russia and the West.
Russian
Economic Power Driving Wedge Between Indebted Western
GovernmentsOfficials
in the U.S. and European Union are having second thoughts about
punishing Russia with sanctions targeting entire industries and the
Russian economy, opting instead to focus on tightening pressure by
targeting more individuals and companies.
Policy
makers say they are concerned that broad-brush sanctions on Russia’s
energy and financial sectors, the two areas mentioned as possible
targets, risk provoking economically costly retaliation by Russia
according to Bloomberg.
Gazprom, Russia’s massive gas-export
monopoly, yesterday threatened to cut off supplies to Ukraine, a
reminder of the power Russia wields over energy supplies to the rest
of Europe.
A gas cutoff by Russia would wipe out half of
Ukraine’s supply and could severely disrupt supplies to the EU. The
EU, Turkey, Norway, Switzerland and the Balkan countries received 30%
of the natural gas they burned from Russia last year, according to
the U.S. Energy Department.
“We have to be very careful not to hurt
ourselves more than we hurt the other side,” Polish Foreign
Minister Radoslaw Sikorski said yesterday in a speech in Brussels,
echoing comments made by U.S. Treasury Secretary Jacob J. Lew last
week.
In a sign of Russia’s ability to use its
economic power to drive a wedge between its former G20 allies,
France’s government said this week it will deliver Mistral
helicopter carrier warships to Russia as planned, thus rejecting
requests from its European and U.S. allies to cancel the sale.
There are also significant dependencies on
Russian grain exports, particularly in the EU.
It looks the pragmatists and non ideologues may
be gaining the upper hand over the more hawkish western voices
who were risking conflict with Russia, potentially militarily.
Russia is powerful both in terms of natural
resources and in terms of finances given their very significant
foreign exchange reserves. Ukraine is bankrupt and on the verge of
hyperinflation as we pointed out here. Ukraine desperately
needs some $20 billion to avoid financial collapse.
With Western nations heavily indebted including
the hugely indebted U.S., Russia looks like the only realistic
source of such funds.
Geopolitical risk remains very much
underestimated and there remains the risk of financial, economic and
currency wars where the Russians use gold as a geopolitical weapon to
undermine the dollar.
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