The Week In Hindsight, 02 April 2014
The opening week to May proved a volatile period for gold prices as under performance in economic numbers from the UK, US and Europe drove attempts by the metal to snap out of its downward drift on a number of occasions.
After being driven sharply lower during Friday afternoon trade, following the release of US unemployment and new jobs data, spot prices embarked upon a strong rally as violence flared once again in Ukraine.
Reports which emerged throughout the afternoon indicated an unconfirmed, but potentially large number, of deaths on both sides had resulted resulting from gun battles, while it was also confirmed that separatist rebels had shot down two military helicopters in response to Ukrainian attempts to retake an opposition stronghold.
The renewed violence has prompted further harsh rhetoric from western governments, in addition to threats of more sanctions, in response to what has been viewed internationally as Russian attempts to destabilise Ukraine for the purpose of preventing democratic elections from going ahead on May 25.
With no resolution to the crisis on the horizon and the severity of violence now increasing, the risk of further escalations has, once again, increased. For these reasons, and given the ongoing proximity to the Ukrainian border of large numbers of Russian forces, markets are likely to remain on edge for the length of time that is necessary for progress to be made in efforts to resolve the crisis.
As a result, over the near term we see strong support for gold prices at, or around, the $1280 per ounce region. With spot prices now set to close for the weekend above $1300, we view a further leg upward toward the $1330 per ounce mark, or above, as the most likely outcome for the week ahead.