Precious metals are moving directly upwards through the first half of the day on Wednesday as the market is paying more attention to violence, or potential violence, between Ukraine and Russia. US stocks began the day doing well, but by the time word of Russia’s potential military intervention in Ukraine got around, investors began to grow a bit more uneasy. Unlike last week, this week is not expected to yield all that much in the way of US economic data.
Last week, however, brought about a good bit of US economic data, including the second-quarter GDP report. On an annualized basis, it was reported that the US economy grew by more than 4% during this year’s second quarter, a number that beat expectations by a long shot. While this news caused US stocks to move upward, Friday’s July employment report did exactly the opposite. Compared to expectations holding that more than 230,000 jobs would be added to the US economy in July, it was reported that only 209,000 jobs were created last month. This news dealt stocks a blow, albeit a temporary one.
Market’s Focus Shifts Back to Russia
Despite the fact that a number of geopolitical events have been simmering on the back-burner of the market’s attention, they really haven’t caught the full attention of investors. This week, however, a lack of any new economic data combined with a few new developments have caused investors to focus on the tensions between Ukraine and Russia.
On Monday of this week, a Polish foreign minister was quoted as saying that tens of thousands of troops were massing on Russia’s Western border with Ukraine. Though no forces have crossed over the border, there is a growing belief that Russia may, at some point in the near future, enter Ukraine under the pretext of a humanitarian mission. Though the Kremlin has not commented in any amount of detail with regard to what their plans with troops on the border are, the market is growing increasingly uneasy. What the Kremlin has said in recent days, however, is that Russia is now banning, for one year, all agricultural products from countries who have imposed sanctions upon the Russia Federation.
Looking ahead to the last few days of the week, it is likely that the market’s attention will remain fixated on the crisis in Ukraine. There is not very much economic data on the slate, and apart from watching the progress of US equity markets, investors do not have much to preoccupy themselves with. So long as the marketplace is fixated on violence, or the potential for violence, precious metals are likely to experience underlying support.