Gold and silver are both seeing some profit-taking after recent gains, but are still hanging in there due to rising safe-haven demand as a result of a few geopolitical flashpoints. After hitting near three week highs in the early morning hours of Monday, both gold and silver have been seen conceding those gains and mostly trading sideways.
The big piece of news for the week is without a doubt the upcoming Federal Open Market Committee's monthly policy meeting. The current expectation for that meeting is the continued reduction of Quantitative Easing. Despite these fairly standard expectations, the market will still want to be paying close attention to everything Janet Yellen has to say in her post-meeting statement.
Violence In Iraq, Tensions In Ukraine Fuel Safe-Haven Demand For Metals
For little more than the past week and a half or so, the world has begun to pay close attention to the outbreak of violence in Iraq. As of the last few weeks, the Islamic State of Iraq and Syria, or ISIS, has been seizing numerous towns and cities across much of northern Iraq. The rebel militant group has been in and out of the news over the past few years as they have really made their presence known throughout the Syrian civil war. ISIS can best be described as a conglomerate of fragmented Islamic militant groups and has been growing fairly rapidly over the course of the past few years.
ISIS is now so strong that they are handling Iraqi security forces with ease. Just over this past weekend it was reported that more than 1,700 Shiite soldiers were captured and killed by ISIS. Now, with a decimated military and the stability of their nation at risk, Iraqi officials have pleaded with the United States for some help in ousting ISIS. The US took some time to consider its options but announced today that it would be sending a few hundred Special Ops forces and military advisers to Iraq to help the existing security forces. The United States has also called upon regional powers Iran and Turkey to provide assistance to their Iraqi neighbors, but no such action has been taken as of this writing.
All this violence and insecurity in the Middle East is doing well to fuel safe-haven demand for precious metals. Though spot values have receded a bit today due to the outbreak of profit-taking after recent gains, it is clear to see that gold and silver have been given revived momentum and will likely continue to benefit from the ongoing violence in Iraq.
Also helping precious metals is the fact that tensions between Ukraine and Russia are on the rise for yet another time. Gazprom, Russia's leading natural gas provider and sole provider of natural gas for Ukraine, is threatening to shut off gas pipelines if future gas provided is not paid for ahead of time. The financially unstable nation of Ukraine is likely not able to meet those demand and will soon see its supply of natural gas cut off completely. Rising tensions in Ukraine are also providing metals with a bit of a boost. We will continue to keep our eyes on both Ukraine and Iraq as both scenarios are still far from resolved.