The Week In Hindsight, 25 April 2014

Gold remained under pressure throughout much of this week as last week’s Geneva accord and a positive turn in US economic data saw risk appetite among investors increase. Spot prices reached lows of $1270 before a sharp rise in weekly unemployment claims in the US and renewed violence in Ukraine sent prices rallying back toward $1300.

Overall, our outlook for gold over the near term remains in place and unchanged. This sees resilience in prices while tensions remain high in eastern Europe, while a positive turn in US economic conditions and an improving European growth outlook are likely to weigh on prices over the medium term.

For the time being, the actions of Russian separatists and the new government in Kiev have inevitably led to bloodshed, which has now invited further harsh rhetoric and veiled threats from the Kremlin. This is while Russian troops continue to amass near the border between the two countries.

Given the ease with which the Geneva accord has been discarded, and the fact that no further resolution is in sight upon the horizon, the possibility of a Russian military incursion into Ukraine over the coming days and weeks is seen as increased. This is likely to ensure continued support for, and volatility in, gold prices over the near term.

Spot Gold

Gold 25 April