This morning, gold declined to a two-week low as investors took time to process what the recent election of Ukraine’s new president means for the country and tensions with Russia.
The strengthening of the US dollar in the past two weeks has also reduced gold’s attractiveness.
The price is trading sideways; often when this happens, we see a fall in volumes traded. However, this is not currently the case. Investors are not bored or losing interest in gold. There has not been a sudden spark in activity — instead, trading is neither hot nor cold.
This is because factors affecting the gold market are currently balancing one another out, such as upcoming central bank meetings, inflation levels and geopolitical tensions. When direction is found, i.e. when one of the factors out balances the others, there is likely to be a spark in activity towards that direction.
While official media reports suggest relations are improving between Ukraine and Russia, military activity on the ground suggests otherwise. This could also be good for gold, increasing its safe-haven demand. Russian President Vladimir Putin told journalists both Russia and China need to ensure their gold and currency reserves are secure.
“For (Russia and China), it is important to deposit those (gold and currency reserves) in a rational and secure way,” Putin said. “And we together need to think of how to do that, keeping in mind the uneasy situation in the global economy.”
The Austrian accountability office will send a delegation to the Bank of England in order to check on the National Bank of Austria 150 tons of gold reserves stored in London.
“I acknowledge the request," Ewald Nowotny, governor of the National Bank of Austria, told Trend. "Any grocery store is obliged to do inventory once a year. It is the only way of getting rid of these unreasonable allegations."