Gold Corrects, Palladium Soars: Morning Market Update May 20

May 20th, 2014 by

Precious metals are seeing a sudden corrective bounce in early COMEX trading, after a large sell order was unable to appreciably move the market downwards.

Palladium took the opportunity to light the boosters, and is testing the $825 mark.

Markets are looking at another risk-off day, as bond yields for the distressed PIIGS (Portugal, Italy, Ireland, Greece, and Spain) shoot upwards. Wall St. opened in the red, and promptly dove deeper.  European markets are also softer, on worries about disinflation.

In Asia, the Nikkei was up on a softer yen, while tech and telecom stocks lifted the Hang Seng and Shanghai indices.

Today provides a buffet of safe haven demand in Asia, as the Peoples Liberation Army masses on China’s border with Vietnam, after riots destroyed numerous Chinese businesses there. The riots were sparked by China installing an offshore oil drilling rig in waters claimed by thailand-vietnam-mapVietnam, while repeatedly ramming Vietnamese Coast Guard boats that were trying to intervene.

If that isn’t enough “doom” for you, jog to the west a bit, where the Thai military has finally declared martial law, after deadly riots between the two major rival political factions have persisted since last November. The Thai Constitutional Court removed the prime minister for abuse of power and violating the Constitution, but her supporters have refused to acknowledge the judgement. This has led to violent clashes with opposition groups.

The head of Thailand’s military council addressed the nation, declaring a state of emergency, and denying that today’s measures were a military coup (there have been 11 coups since the king gave up absolute power in 1932.

ukraineSwinging over to Europe, presidential elections in Ukraine are set for Sunday. This election was announced when the current pro-Western government seized power from pro-Russian President Viktor Yakunovych. The big question is, will armed separatists in eastern Ukraine’s industrial areas allow polling stations to be set up, or will they back their claim to be independent with force?

There isn’t much in the way of fundamentals driving gold at the moment, though chart watchers say that a triangle pattern has formed, and to watch for a breakout soon. Of course, that’s advice for short-term traders and speculators. People who are looking at the long term know that gold is a long-term hedge against market volatility and dollar devaluation.


by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News