Despite feeling some pressure all week long, precious metals are going to be ending the week on a somewhat positive note, having made some decent gains today. The main concern for investors all week long has been the various geopolitical happenings developing in various parts of the world. While there wasn’t too much economic data on this week’s slate, what data was released ended up having a noticeable impact on equity markets and, as a result, on precious metals spot values as well.
Geopolitics Remain on Front-Burner of Market’s Attention
For the past few weeks, investors around the world have been taking time during the slow summer months to focus more readily on a number of unfolding geopolitical situations. For one, the investigation into the downing of Malaysian Airlines Flight MH-17 has just gotten underway and is yielding new developments every day. While many of the victims’ bodies have been recovered by rebels, observers, and/or rescue teams, most have yet to be identified and more still have not even been recovered from the wreckage.
Since the plane was shot out of the sky by surface-to-air missiles little more than a week ago, mountains of international pressure has been placed upon Russian leaders to deescalate tensions in the region. So far, however, international pressure and fresh economic sanctions from the United States have done little in the way of forcing Russia to cooperate. Just today, it was reported that large, long-range surface-to-air missiles crossed over the border from Russia into Eastern Ukraine. While it is still unclear, most people are perceiving this as a direct and outright transfer of weapons from Russian to pro-Russian rebel hands. With tensions between the US and Russia as high as they have been in years, it will be interesting to see how markets react by the time next week rolls around.
In other news, Israel’s air and ground raids on the Gaza Strip and Hamas rocket units specifically has been growing over the course of the past 2 and a half weeks. Since July 8th, Israeli air raids and ground attacks have claimed the lives of more than 800 Palestinians, most of which are civilians. As recently as yesterday, an Israeli rocket struck a school turned refugee shelter, claiming the lives of 16 people, some of which were children. Over the last few days, protests have been sparking up around the world in support of Palestine. In the West Bank especially, protests turned violent as the disgruntled masses clashed with Israeli troops. In response, the troops fired live ammunition back at the protesters, killing at least two. As the market heads into an uncertain weekend, risk-aversion is beginning to creep back in as both the situations in Ukraine and Israel seem to be deteriorating.
While gold has been able to work its way just barely back above $1,300/ounce to close out the week, silver is still sitting 30+ cents below the $21 threshold. If safe-haven demand begins to pick up over the weekend like many believe it will, precious metals may be in much better standing by this time on Monday.