This morning gold declined to a two-week low as investors took time to process what the recent election of Ukraine’s new president means for the country and tensions with Russia. The strengthening of the US dollar in the last fortnight has also reduced gold’s attractiveness.
The price is trading sideways at present, often when this happens we see a fall in volumes traded, however this is not currently the case. Investors are not bored or losing interest in the yellow metal. There has not been a sudden spark in activity, instead trading is neither hot nor cold.
This is because factors affecting the gold market are currently balancing one another out, factors such as upcoming central bank meetings, inflation levels and geopolitical tensions. When direction is found, ie when one of the factors out balances the others, then there is likely to be a spark in activity towards that direction.
Whilst official media-reports surrounding Ukraine suggest that relations are improving between the country and Russia, military activity on the ground suggests otherwise. This could also be good for gold, increasing it’s safe-haven demand. Further to this President Putin told journalists that both Russia and China need to ensure that their gold and currency reserves are ‘secure’.
“For us (Russia and China) it is important to deposit those (gold and currency reserves) in a rational and secure way,” he said. “And we together need to think of how to do that keeping in mind the uneasy situation in the global economy.”
Yesterday news broke that the Austrian accountability office will sent a delegation to the Bank of England in order to check on the Austrian central bank’s 150 tonnes of gold reserves currently stored in London. “I acknowledge the request. Any grocery store is obliged to do inventory once a year. It is the only way of getting rid of these unreasonable allegations”, Ewald Nowotny, Governor of the National Bank of Austria told Trend.