Geopolitical stresses in Ukraine and Iraq are resulting in fresh safe haven inflows for gold and U.S. Treasuries, as trepidation over the cost of Russian sanctions to the EU weigh on European markets.
Gold softened in early Asian trading overnight, before popping slightly at the London open. Another minor blip upward early in New York had gold touch $1,316 before settling into a range.
Silver was a little erratic overnight, and is trading near unchanged after a small blip on the COMEX open.
Platinum saw minor losses at the Asian open, but soon regained its footing to trade just north of unchanged in New York. Palladium traded flat in Asia before mild gains in Europe.
Geopolitical News Affecting Gold
The political crisis in Iraq has escalated, with prime minister Maliki refusing to acknowledge the president’s appointment of a rival to form the new government. The Iraqi government has been paralyzed for months as Maliki refuses to negotiate with Sunnis and defuse the sectarian conflict which allowed ISIS terrorist army to take control of nearly half the country. ISIS is now selling oil from captured Iraqi oilfields, and making millions of dollars every day to fund its plans of Middle East conquest. (Sounds like someone should drone-strike some pumping stations.)
Maliki has called out loyal army troops and militias to cover the streets of Baghdad, while threatening to “correct” the actions thwarting him from a third term in office. Western powers, including the U.S. (who installed Maliki in power in the first place) have called on Maliki to stop fracturing the government and giving ISIS an easy victory.
In Ukraine, news that an aid convoy from Russia was traveling to eastern Ukraine under the auspices of the International Red Cross turned out to only be half true. Upon hearing that the Red Cross had no idea what was in the 280 Russian transport trucks, or where they were going, Ukrainian authorities refused the convoy permission to cross the border. Kiev has offered to offload the trucks at the border, and carry the aid the rest of the way to the affected areas itself, but no word yet if Moscow will agree. Fears in Kiev and the West is that Russia will use the guise of “humanitarian aid” to smuggle troops and weapons to the pro-Russian rebels, which are being hard-pressed by the Ukrainian Army.
The ceasefire in the Gaza Strip seems to be holding, as Israeli and Hamas representatives continue to meet is “difficult” negotiations in Cairo.
Economic News Affecting Gold
In Europe, the ZEW economic indicator of investor sentiment plunged from 27.1 in July to just 8.6 in August, over worries about the effect sanctions against Russia, and Russian sanctions against the EU will have on the economy. This sent European stocks down, and the euro down to near 9-month lows.
Wall St. opened lower, and is trying to get its head above the water in volatile early trading. Treasuries are gaining, with the yield on the 10-year note at 2.43%.
The ZEW survey was the big economic report for today. Tomorrow, we’re looking at Japanese GDP, Chinese Retail Sales and Industrial Production, EU Industrial Production, and U.S. Retail Sales and Home Mortgage Applications.