The Week In Hindsight, 30 May 2014
Gold came under pressure this week as the receding crisis in Ukraine drove prices down by $40 before Friday, despite GDP numbers released on Thursday that suggested the US economy may have contracted during Q1 of 2014.
The primary driver of prices during the week was last weekend’s Presidential election in Ukraine which saw billionaire Petro Poroshenko installed as the head of the nation. Following months of escalating violence, Ukraine caught its first glimpse of stability after the new President immediately denounced separatist rebels in the east, stating that Ukraine will not negotiate with “terrorists” and vowing to restore order to the country.
In the case of gold, the instalment of an EU friendly leader was the catalyst for a break below the $1275.00 level, followed by the $1260.00 barrier and then finally, in time for the Friday close; below the 1250.00 mark.
This leaves the metal in a precarious position, with US employment numbers due over the course of the coming week, an ECB rate cut on the cards as a result of too low inflation and more PMI numbers from the UK which has been hailed as the fastest growing developed economy so far into 2014.
Should the economic data due over the next seven days point toward accelerating growth in the west, then this could form the catalyst for another push toward lower levels in gold, potentially a test of the $1225.00 region.