Sanctions and backlash.
Global markets are weak as the combination of increasing calls for tough sanctions on Russia and heavy fighting between Israel and the Palestinians is adding uncertainty to global economic outlook. The evidence is mounting of Russia's involvement in the missile strike that brought down the Malaysia Airlines flight that killed 298 people. The anger level and outrage makes it very likely that there will be even more sanctions leveled against Russia and Putin's' billionaire buddies. Also reports that 13 Israeli soldiers were killed and 96 Palestinians in heavy fighting is keeping Mideast tensions high.
Petroleum markets are mixed trying to balance the possibility of weakening demand versus the possibility of risk to supply while gold and bonds are modestly higher. Reports of rising Saudi Oil productions as well as the extension of talks until November 24 with the P5+1 and Iran over their compliance with UN nuclear regulations is one factor giving comfort to the market. Another is a Wall Street Journal report that "Iraqi officials said special-forces secured full control of a former U.S. military base on the outskirts of Tikrit on Sunday, three days after insurgents began pushing into the base with suicide bombers in a bid to thwart a government campaign to retake the area."
Those big sell orders in gold last week shook out some hedge funds. Bloomberg News reported that Hedge funds cut bets on a gold rally for the first time in six weeks as prices snapped the longest stretch of gains since August 2011. Money managers trimmed their net-long position by 8.5 percent in the week through July 15, U.S. government data show. Prices dropped 2 percent last week, the first loss since May and helping to erase $1.38 billion from the value of exchange-traded products backed by the metal.
Gold has climbed 9.5 percent this year, outpacing gains for commodities, equities and treasuries, partly as tensions between Ukraine and Russia increased demand for a haven. The gains are set to reverse as the economy improves and the Federal Reserve "eventually" increases U.S. interest rates, the World Bank said in a report July 17.