Despite a brief decline towards the end of last week, spot gold and silver are both making comebacks as of midday on Wednesday. There are a number of factors working in precious metals’ favor today, namely a significantly lower US Dollar. At present, the USD is now at a 2.5 year low versus the euro currency.
In other news, the crisis in Ukraine has made its way back to the front burner as tensions in the region have once again escalated. With a referendum to decide whether Crimea remains part of Ukraine or rejoins the Russian Federation only a few days away, the potential for violence to break out is rising at every turn.
Recently Weak Chinese Data Driving Down the USD
In most cases, weak economic data out of China tends to translate into a weaker spot price for gold and silver. This time around, however, weak Chinese data is having that effect on the US Dollar. Despite recently strong predictions with regard to economic growth this year, China has been the epicenter for somewhat consistently disappointing economic data.
While it is still too early to determine if this lull in the numbers out of China is temporary or indicative of a developing trend, a large quantity of investors are getting out early and not taking their chances.
Crisis In Ukraine Sees Tensions Escalate Again
No more than a week ago, the crisis in Ukraine began becoming less of a concern for the marketplace as it seemed as though cooler heads were going to prevail. Despite attempts at diplomatic resolutions to the crisis revolving around the southern Ukrainian region of Crimea, it seems as though all things are pointing towards some sort of armed conflict between Russia, Ukraine, and any number of potential other countries.
After the parliament of Crimea voted unanimously last week to rejoin the Russian Federation, the citizens of Crimea are scheduled to take part in a referendum this Sunday to see if they echo the sentiments of their parliament. At the present moment in time it seems as though the citizens of Crimea stand by their parliament and will want to see their homeland rejoin Russia after having been independent since the mid-1950s. Though with that being said, many Western leaders and the interim Ukrainian government seem to believe otherwise.
If the referendum goes as planned and sees Crimea legally voted back into control of Russia, there is no saying how Ukraine and its allies will respond. What we do know, however, is that the rising tensions are driving further interest in safe-haven gold and silver. As of Wednesday afternoon, spot gold is up over $20 and spot silver is up over a half dollar for the day. Only time will tell how the crisis in Ukraine will pan out and whether or not it will result in some sort of armed conflict.