Gold and silver are both trading higher to close out what has been a mostly uneventful 5-day session. Metals are currently being lifted by increased safe-haven demand as a result of increased tensions in Ukraine. There was not all that much US economic data on the slate this week, and what little data was released did not have too much of an impact on precious metals.
China’s April manufacturing PMI came back weaker than March’s reading and suggested that the manufacturing sector of the economy is still stagnating. Earlier this week it was announced that the central bank of China reduced its reserve requirement ratio for some more rural banks in an attempt to stimulate the agricultural sector of the economy. On the other side of the globe, the EU manufacturing PMI reading for April was released and showed a grouping of European economies that is continuing to grow. While deflation concerns still abound, there is no doubt that the EU economy is performing extremely well so far this year.
Tensions In Ukraine Drive Safe-Haven Demand, For Now
The countless problems plaguing Ukraine have been in and out of the news for the last few weeks now. This week saw things intensify as the Ukrainian military worked to oust pro-Russia militiamen who have taken control of cities along Ukraine eastern border with Russia. There have been a few casualties as a result of the fighting between the rebels but more recently Russian officials have warned that attacks on Russians within Ukraine will be interpreted as an attack on Russia itself. This threat was enough to encourage the Ukrainian military to more or less back off of any and all attempts at ousting the pro-Russia militiamen.
As we head into the weekend, investors are growing increasingly risk-averse and that alone is propelling safe haven demand. Having said that, however, it is unlikely that safe-haven demand alone will allow precious metals to sustain an upward trajectory. That much is yet to be seen but just as quickly as the situation makes its way to the headlines it can just as easily fade to the background. It will be interesting to see how the situation develops over the weekend and what kind of affect it will have on precious metals values come Monday morning.