Silver: World’s most undervalued asset?

Gold and silver fell for a second straight session today despite escalating tensions between Russia and the West.

  •  Today’s AM fix was USD 1,289.75, EUR 930.02 and GBP 767.07 per ounce.
  • Yesterday’s AM fix was USD 1,302.00, EUR 938.45 and GBP 772.79 per ounce.
  • Gold fell $6.10 or 0.47% yesterday to $1,296.60/oz. Silver slipped $0.12 or 0.61% yesterday to $19.59/oz.

Markets await this week's U.S. jobs report and a Federal Reserve policy meeting for further hints regarding the fragile U.S. economy and the extent to which ultra loose monetary policies will continue. 

Tensions between the West and Russia over Ukraine remained very high after the United States imposed new sanctions on key Russian business figures. This prompted Moscow to denounce "Cold War" tactics.

President Obama announced the U.S. would impose a new round of sanctions on individuals and companies in Russia. Obama said the sanctions will focus on “some areas of high-tech defense exports” to Russia.

Violence continues in eastern Ukraine and risks deteriorating. The Cold War rhetoric and geopolitical risk is being overlooked for now.

 

Silver in U.S. Dollars, 5 Years (Thomson Reuters)

 

In the physical markets, data showed China's gold purchases via main conduit Hong Kong fell to a four-month low in March. Net gold imports totaled 80.6 metric tons in March, compared with 111.4 tons in February.

Imports remained very high in the first quarter and are on track to equal the record level of demand seen in 2013 (see chart below).

 

 

Shanghai gold prices have now recovered to a premium of about $1 an ounce indicating a slight uptick in demand. An increase in physical demand across Asia appears to be providing a strong floor for gold.

 

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