Gold experienced volatile price movements on Thursday, Nov. 13, as global market participants processed U.S. economic data and the latest developments involving Russia and Ukraine.
Russia-Ukraine conflict
The North Atlantic Treaty Organization recently announced that Russia is sending additional tanks and soldiers into Ukraine, The Wall Street Journal reported. This escalation of existing tensions could have impacted the commodity’s value by helping to bolster demand for the precious metal.
Amid these developments, December gold rose $2.40, or 0.2 percent, to settle at $1,161.50 per ounce on the Comex division of the New York Mercantile Exchange, according to Reuters. However, spot gold went in the opposite direction, falling 0.1 percent to $1,159.59 by 2:38 p.m. EST (19:38 GMT).
While the December contract experienced a small gain during the session, “the Russia-Ukraine conflict could move from the back burner of the market place to the front burner in a hurry,” Jim Wyckoff, a strategist at Kitco, told The Wall Street Journal. This “would very likely be supportive for safe-haven assets such as gold and U.S. Treasuries.”
US jobs data
As for the reports providing information on America’s labour market, government data showed the nation’s jobless claims dropped 12,000 to 278,000 during the week ending Nov. 8. As a result, these initial applications of unemployment benefits stayed near a 14-year low.
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This fact, combined with higher quit rates, supported the idea that the labour market is getting better, Reuters reported. This development could have impacted the sentiment of market participants, reducing their desire to harness gold as a safe haven.
Gold’s performance in 2014
Since reaching its 2014 high, the precious metal’s value has plunged 16 percent, according to The Wall Street Journal. Amid this decline, gold reached its lowest in 4.5 years earlier in November. Many investors have been shunning the precious metal amid speculation the Federal Reserve will bolster its benchmark borrowing costs in 2015 as business conditions continue to improve.
Rising interest rates could easily provide headwinds for gold, as the precious metal does not pay interest. As rates move higher, financial instruments such as bonds will offer higher payments to investors who hold them.
Gold has already encountered difficulty stemming from a consistent release of strong economic data, according to Reuters. These promising reports have helped support speculation the Fed will increase its borrowing costs in the near-term. However, analysts have asserted the metal’s price already reflects this expectation.
Market participants have been monitoring the statements of central bank officials in order to glean insight into when – and with what pace – the Fed would move to reduce its major forms of policy stimulus. After the central bank stopped purchasing bonds, investors began speculating about when it would hike its interest rates.
At the time of report, the latest government official to provide insight into the situation was New York Federal Reserve President William Dudley, who stated that the nation’s economic expansion could suffer if the financial institution reduced its monetary stimulus too soon, according to Reuters.
Investors who want to trade gold can benefit from knowing about the fluctuations the precious metal experienced on Thursday, Nov. 13. Being aware of these price movements – as well as the major developments that coincided with them – could help these investors make better-informed decisions.
The post Gold Prices Fluctuate amid Economic Data and Russia-Ukrainian Conflict appeared first on | HY Markets Official blog.
