Stocks Tumble, Supply Concerns See Food, Energy and Precious Metals Rise

Today’s AM fix was USD 1,344.25, EUR 975.58 and GBP 803.50 per ounce.                            

Friday’s AM fix was USD 1,327.75, EUR 961.65 and GBP 793.21 per ounce.          

Gold fell $5.90 or 0.44% Friday to $1,324.60/oz. Silver dropped $0.11 or 0.52% at $21.17/oz. Gold was up 0.8% and silver finished down 2.93% last week.

Cross Currency Rates - (Bloomberg)

Gold gained more than 1.4% today on escalating geopolitical tensions. Ukraine mobilized for war after Russia bloodlessly seized Crimea, in what some are seeing as the most serious geopolitical crisis since the end of the Cold War.

The dollar was mixed and saw losses against the yen and Australian dollar but gains against the euro and the pound both of which came under pressure.

Stocks in Europe and Asia tumbled with U.S. equity-index futures and emerging currencies while gold, silver and Treasuries gained. The Standard & Poor’s 500 Index futures fell the most in a month and the FTSE, CAC and DAX were all down by between 1.2% and 2.3%.

The G7 industrialized nations condemned Russia's intrusion into Ukraine and cancelled preparations for the G8 summit, that includes Russia, scheduled for Sochi in June, the White House said.

Gold rose to an intraday high around $1,345 an ounce. The United States is threatening to isolate Russia economically in what is the biggest confrontation between Russia and the West since the Cold War.

Premiums for
gold bars in Singapore were unchanged from last week at 80 cents an ounce over the spot London prices.

Russia is the world’s largest energy exporter and economic and military friction between the superpowers could lead to a surge in key commodity prices. Crude oil hit multi-month highs.  Brent crude rose as much as 2% to $111.23 and NYMEX by 1.2% to $104.32.

U.K. natural gas jumped the most in more than 16 months and was 2.3% higher to $4.72 on supply concerns. Wheat and corn surged 4.3% and 3.3% respectively, also on supply concerns.

Russia’s central bank unexpectedly boosted its key interest rate 150 basis points as shares in Moscow plunged the most in five years. Russia’s Micex index plummeted over 8% and the ruble slipped to a record low versus the dollar.

Industrial metals retreated after Chinese manufacturing gauges for February signaled slower growth as officials prepare to meet this week on policy targets. A purchasing managers’ index of euro zone factory output is due today before U.S. reports on consumer spending and factory activity.


The negative data out of China and the heightened geopolitical risk in the Crimea is leading to a renewed bout of risk aversion which is supporting gold. This risk does not look like it will abate in the short or medium term. Indeed, should relations between Russia and Western nations deteriorate further, it will have consequences for already vulnerable economies and lead to increased safe haven demand.   

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