Gold rose more than one percent in Asia on Monday, paring last session’s losses, as escalating geopolitical tensions between the West and Russia over the Ukraine stocked risk asset buying. Ukraine ordered its military to full combat alert after Russian lawmakers authorized the deployment of troops on the country’s territory.
Spot Gold which gained nearly 7 percent in February - the biggest monthly rise since July - due to worries over economic weakness in China and the U.S. as well as continued political turmoil in Ukraine rose 1.87 percent as of 03:20 ET, to trade at $1,347.28 an ounce after opening at $1,332.27.
Combat ready? Ukraine orders full mobilization
Ukraine has ordered a full military mobilization on Sunday, the development have been sparked after Russian President Vladimir Putin received his parliament's approval to deploy troops in Ukraine - defying warnings from the United States not to intervene.
The G-8 nations urged Russia to result to diplomatic resolutions and restrain action.
Ukraine’s new Prime Minister Arseniy Yatsenyiuk says the Russian decision is a declaration of war, “This is not a threat: this is actually the declaration of war to my country," Ukraine's Yatseniuk said.
Obama plans to squeeze Russia, dollar tumbles:
Tensions in Ukraine pressured the dollar on Monday, forcing investors to cut their exposure to riskier assets in favor of traditional safe-haven currencies such as the Japanese yen and Swiss franc.
The dollar was down on Monday against a basket of main currencies, trading at 79.84 after opening at 79.85. The USDIX index so far hit a session high at 79.87 and a session low at 79.77.
President Barack Obama’s administration considers asset freezes, travel visa bans and sanctions on banks to punish Russia. U.S. Secretary of State John Kerry will travel to Kiev to meet with Ukrainian leaders on Tuesday to offer support.
Fed tapering, jobs data to shape up U.S. week ahead:
Precious-Gold was already supported since last week, after Federal Reserve Chair Janet Yellen, in testimony to the Senate banking committee in Washington, acknowledged recent weakness in U.S. data, saying it indicates softness in the economy.
Yellen added that the central bank would be attentive to signals on whether the recovery is progressing in line with expectations.
The rally in risk assets over the past few weeks highlights complacency surrounding a string of disappointing U.S. economic data, as well as a discounting of firmer Fed ‘Taper’ expectations. The recent patch of soft U.S. economic data raised fears over the future course of the Fed's monetary policy.
In the week ahead, investors will be anticipating Friday's U.S. nonfarm payrolls report for an indication of the strength of the recovery in the labor market and the future course of the bank’s stimulus program.
The unemployment rate is expected to remain steady at 6.6%, while the non-farm payrolls report is expected to show that 150,000 jobs were added to the economy in February, following two successive months of disappointing outcomes.
Among other major data due in the U.S. next week, the ISM manufacturing index is expected to remain weak for another month as industry pays for the poor winter weather. The Federal Reserve publishes its Beige Book analysis of economic conditions, while the the White House will release Obama’s fiscal 2015 budget plan.
- Spot Silver gained 1.99%, 0.42 points to $21.65 an ounce
- Spot Platinum rose 0.83%, 12.00 points to $1,456.50 an ounce
- Spot Palladium added 0.30%, 2.25 to $746.00 an ounce
Copper falls on China data:
Manufacturing activity in China, the world's largest copper consumer, fell less-than-expected last month, where Chinese Manufacturing PMI fell to an eight-month low of 50.2 in February from 50.5 in the preceding month, official data showed on Saturday.
- COMEX Copper fell 0.83%, 2.65 points to trade at 316.10
To sum up, we expect to see risk aversion sentiment to dominate Monday across markets, choppy trading will be evident as investors weigh the situation in Ukraine.