Safe-haven demand is pushing spot gold and silver further up in value this morning, making this week one of the most profitable for both metals thus far in 2014. The attention of the investing world remains fixated on both the economic downturn of China as well as the ongoing crisis in Ukraine. A referendum which will basically decide the fate of the Ukrainian region of Crimea is scheduled for Sunday and threatens to bring simmering tensions to a full boil.
The investing world is also beginning to bring their focus to next week’s Federal Open Market Committee meeting and its possible outcomes. It is expected that the Fed will reduce Quantitative Easing again, but it is not clear by how much they will further reduce monthly bond-buying.
Crisis In Ukraine Threatens Stability Of Country, Region
At this time last week, talks with regard to what was going on in Crimea were beginning to fade into the background as it looked like diplomatic means would be utilized to solve the highly tense verbal dispute. Over the weekend, however, video reports showed the world that the pro-Russian military presence in Ukraine was not dwindling, but in fact being buffered. Video after video of unmarked, masked men marching into cities and towns followed by caravans of armored vehicles proved that the crisis in Ukraine was far from resolved.
This weekend will see tensions rise again as citizens of Crimea are going to vote on whether they want their home to remain part of Ukraine or if they prefer to rejoin the Russian Federation. As it stands, the world is expecting the citizens of the ethnic-Russian dominated Crimea to vote in favor of rejoining Russia. If the vote does play out as expected, there is no saying how the interim Ukrainian government and its allies will respond. With that being said, there is a growing feeling that the result of Sunday’s election will prompt some sort of violence between pro-Russian forces and those who back the government in Kiev.
This week’s events and the possible events set to unfold this weekend have been and will continue to drive safe-haven demand for gold and silver. In fact, gold’s spot value has improved by around $40 this week while silver’s spot value has gained nearly a dollar over this 5-day session. Barring any unexpected economic news or severe profit-taking over the weekend, the spot values of precious metals will open next week at their highest points in months and will have a solid first 2.5 months of 2014 to reflect upon.
In other news, worries with regard to the strength of the Chinese economy are beginning to surface and are driving the Dollar as well as the outlook on the world’s second largest economy straight into the ground. While these worries have helped safe-haven demand for gold and silver in the short-term, an economic slowdown in China will likely not bode well for metals in the long-run. For this reason we will continue to analyze any and all economic data stemming from China.