Gold Tests Support Ahead of Yellen’s First FOMC Speech: Morning Market Update March 19

March 19th, 2014 by

10945992_xxlGold eased overnight to below the $1,355 level ahead of this afternoon’s conclusion of the Fed’s Open Market Committee meeting, while the dollar firmed. This is in anticipation that the Fed will announce a third reduction of $10 billion in its massive monthly bond and mortgage-backed securities purchases, known as quantitative easing.

This economic news seems to be overshadowing the reports that a Ukrainian soldier was shot dead and two others wounded in the Crimea, after masked gunmen stormed their military base. This occurred despite the fact that Russia and Ukraine had signed a cease-fire, where Russia pledged to not seize any more Ukrainian military establishments on the troubled peninsula, and to allow Ukraine to deliver food to the besieged soldiers. U.S, secretary of state John Kerry is visiting an anxious Poland, Latvia and Lithuania, to reassure them that if Putin tries to invade their ethnically-Russian areas, that the U.S. will respond with military force. These former Soviet client states and Warsaw Pact members made membership in NATO a high priority after the collapse of the Soviet Union, to protect themselves from being reconquered by Russia.

UPDATE: News is breaking this morning that Russian Army troops used unarmed civilian volunteers, including women, as human shields to storm the headquarters of the Ukrainian Navy in Sevastopol and seize control of the base.

U.S. stocks, which had been trending upward, have opened sharply lower and are dropping on the news.

The current account deficit for the U.S. dropped to a 14-year low in the fourth quarter of 2013, in large part due to oil exports. The CAD shrank to $81.1 billion, 1.9% of GDP. European stocks were steady earlier today, in cautious action ahead of the the Fed announcement in the U.S. In Asia, the Nikkei hit a one-week high, up 0.4%, which Shanghai and Hong Kong shares dropped on rumors of more corporate bond defaults in China.

Stocks and precious metals are both going to be caught between the announcements by the Fed and Yellen on one hand, and the sudden escalation of events in Ukraine on the other. Will the U.S. and Europe impose real sanctions over the armed attacks by Russia, or is the prospect of losing money too great? So far, gold is still trading steadily around the $1,345 mark.

by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News