Towards the end of last week, and throughout Monday’s trading, the price of precious metal futures rose as the situation between Russia and Ukraine escalated. During Tuesday’s trading however, market sentiment has eased somewhat.
Gold futures (April 14 delivery) are currently trading at a 16.40 point (1.26%) discount to the day’s opening price, at 1,333.80. Gold is trading around February resistance at 1,334.00, a level which will offer insight into the near term future of the risk-off asset. If gold breaks below this level, a combination of a technical downside break and a fundamental risk-off to risk-on shift could fuel the bearish bias towards February 28 support at 1,321.50.
Similarly, silver futures (May 14 delivery) are also down, currently trading at a 0.312 (1.45%) decline from the day’s open, at 21.173. The metal is still trading well above December through January resistance at 20.408, a level which will likely serve as support if silver futures suffer a further decline with a return to the risk-on sentiment that has dominated the precious metal markets throughout the latter half of 2013.
As the week plays out, the driving factor behind the precious metal prices will be the aforementioned Ukrainian situation. If Vladimir Putin eases the pressure on Ukrainian troops to pull out of Crimea, the downside momentum will likely continue through into Wednesday’s trading. However, investors will be on edge, and in turn, quick to react to any event that points to escalating geopolitical tension. Any such events will likely result in a rapid return to risk-off sentiment and the upside momentum seen throughout the past week.
Elsewhere, crude oil futures (April 14 delivery) are down nearly 1% for the day, trading at 103.92 per barrel heading into Tuesday afternoon. Natural gas futures (April 14 delivery) have fared better, up 2% at 4.584 per million British thermal units (Mmbtu) heading into the afternoon session.
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