Gold: $1,314.47 4.64
Silver: $15.46 -0.07
March 7th Weekly Silver Market Update
Article By: Kyle Wanchalk on March 07th, 2014

When this final day of the week began, spot gold and silver looked like they were going to finish this 5-day session posting some solid gains. Shortly thereafter, however, the non-farm payrolls data for February was released and for the first time in about three months bested market expectations. This added more fuel to the growing fire that is investor risk-appetite and effectively sealed precious metals’ fate for the week. Now, gold is hovering around where it began the week while silver is trading down by over a half dollar.

Another factor working against gold and silver as safe-haven assets is the calming of tensions in Ukraine. We will continue to keep an eye on the eastern European nation as the crisis in the region is far from resolved.

Upbeat Jobs Data, Upbeat Jobs Data Revisions

When this week began, the only other facet of information on investors’ minds besides the ongoing turmoil in Ukraine was that of the non-farm payrolls data for February. Seeing as the last few months of data have been coming in well below market expectations, many market analysts were touting this report as the one that may finally come in above what the market had expected. Those market analysts earned their paychecks this week because the report, released earlier this morning, showed that non-farm payrolls grew in February to the tune of 175,000. This number was 25,000 better than the market had expected and was the first report to beat market expectations this year.

The news of more payrolls being added was quickly followed by reports that the unemployment rate had actually risen, despite the better than expected payrolls data. Jumping from 6.6% to 6.7%, the overall unemployment rate was boosted by what many are saying is an increased number of optimistic job hunters hitting the market and looking for work. So while a rise in the unemployment rate is almost always seen as a negative, this month’s tenth of a percentage point increase was indicative of an increasingly hopeful workforce.

Finally, the Labor Department revised payrolls figures for December and January, saying that negative weather, among other factors, skewed the numbers a bit. December’s figures were increased from 113,000 new jobs to nearly 130,000 and January’s dismal addition of 75,000 payrolls was bumped up to well over 80,000. As you might have expected, all this data worked to increase investor risk-appetite and effectively halt safe-haven demand for precious metals.

Ukraine, Russia, and the West

This week featured a number of developments stemming from the ongoing crisis in Ukraine. On Monday, it was reported that Russian soldiers had seized border posts in the Crimea region of Southern Ukraine (the region that borders the Black Sea and Russia). Quickly following these reports were ones that claimed Russian military action against Ukrainian soldiers who refused to lay down their arms in Crimea was imminent. News of possible military conflict increased tensions in the region from a simmer to an all-out boil that was threatening to boil over entirely.

Fortunately for the world, however, Russia quickly deescalated the situation by calling on troops to return to their bases and denying any allegations that it planned on using force against Ukrainian soldiers in Crimea. The following few days saw leaders from all countries involved more readily seek diplomatic solutions to the crisis, something that further reduced tensions as well as safe-haven demand for gold and silver.

As recently as yesterday however, the situation heated back up a bit as the parliament of Crimea voted unanimously to rejoin the Russian Federation after having been independent since the mid-1950s. Though the West and Ukraine’s interim government are calling this an insult to Ukraine’s sovereignty, Russia refuses to back down on the matter. In little more than a week, a vote similar to the one held in Crimea’s parliament will be held amongst the citizens of Crimea, of which are mostly ethnic Russians. Should the majority of people in the region choose to rejoin Russia, tensions in the region will likely pick back up once more.

For this reason, we will continue to monitor each and every development coming out of Ukraine as they will almost assuredly have some sort of impact on the precious metals market in one way or another.