Gold is testing the $1,350 level in morning trading in New York, as news that more shots were fired by Russian troops seizing a Ukrainian air defense site underscores Moscow’s hard line stance in the region. Threats of sanctions continue from Western Europe, as Russia refuses to recognize the new Ukrainian government in Kiev, which announced that saboteurs were arrested in eastern Ukrainian provinces bordering Russia. The effectiveness of EU threats is considered to be limited by their dependence on Russia for their energy needs, and the threats by Russia to nationalize billions in European-owned facilities, mines and oil wells in retaliation for any sanctions.
This may or may not be bluster; the Russian stock market has already plunged 21.4% over the Ukraine crisis, and the rouble has lost 9.7% of its value against the dollar. Any sanctions could swiftly ruin the Russian economy, and may prod Putin into enacting an “economic nuclear option” and take the EU down with him, by seizing Euro assets and defaulting on Russian sovereign debt for a second time since 1998.
Wall St. opened higher, but promptly fell into the red, more over nervousness about the U.S. economy than over Ukraine. Some investors are beginning to worry about how much of the economic slowdown is weather-related, and how much is simply the stock market topping out on its bull run.
European stocks were helped by news that German exports and imports both rose more than expected in January. The Nikkei saw gains on bargain hunting and the news the the Bank of Japan was continuing its unprecedented quantitative easing policy.
Precious metals are gaining against a slightly stronger dollar, with the primary movers being Ukraine and platinum miner labor strikes in South Africa, now in their seventh week. A moderating influence is fears of economic slowdown in China, which is pressuring base metals. Some of this pressure is leaking over into silver and PGMs, limiting gains so far today.
Gold and silver are keeping their uptrends intact, due to underlying support as well as nervousness over Ukraine.