What Happened Yesterday?
Precious metals were higher Monday morning, as the death toll climbs in Ukraine and the violence spreads to more cities. Gold hit a high of $1,317 an ounce, while silver closed a bit above unchanged. Platinum and palladium gained modestly.
Stocks started deep in the red, climbed to unchanged, and finished marginally higher.
What’s Up For Tomorrow?
Escalating Combat in Ukraine
Ukraine lost another helicopter to heavy weapons fire on Monday, raising questions of where these heavy weapons came from, and who are the trained personnel using them. Mob violence in southern port city of Odessa between separatists and pro-Ukrainian demonstrators led to over 40 pro-Russians being burned alive in a building they had barricaded themselves in. Add to this, 20 separatists were reported killed in a Ukrainian offensive against the rebel-held city of Slavyansk, in eastern Ukraine.
What To Expect:
These horrible events make it more likely that Putin will send the Russian Army into eastern Ukraine for the protection of the mostly Russian-speaking population there. Russia and the West are speaking past one another now, and seem more concerned with scoring political points.
Effect On Gold:
This was the #1 reason for the jump in gold on Monday, though not the only thing. Conditions in Ukraine will play a big part in gold’s movement in the next few days.
European Composite PMI
Lots of Purchasing Manager Index numbers are due in Europe today. Not only the Eurozone composite PMI, but also France, Germany, and Great Britain. EU retail sales will also be scrutinized, looking for some sign that deflation is easing.
What To Expect
Fears of deflation would raise pressure on the ECB to start with outright quantitative easing, which would be bearish for the euro, and bullish for the dollar
Effect on Gold
The effect on these reports on the euro currency may have some related effect on gold, though it could be overshadowed by Ukraine.
U.S. Trade Balance
The trade balance tracks exports and imports of both goods and services. The US trade deficit unexpectedly rose for February, to $42.3 billion.
What to Expect
Analysts expect the trade deficit to fall to about $40.5 billion. Growing exports would help the stock market.
Effect on Gold
A shrinking deficit caused by higher exports will boost stocks, and draw capital away from gold.