Positive economic news in the U.S. caused gold futures to falloff of their six-month highs on Thursday, but on Friday gold prices rallied back to brand new highs. Physical gold prices also finished up again today, rising 0.72 percent to finish at $1,382.31 an ounce.
The good news in unemployment and retail sales announced yesterday was not enough to help the stock market overcome more worries about the political climate in Ukraine. The Dow, the S&P 500, and the Nasdaq were all down about 2% this week, with the biggest drop happening on Thursday. In a further sign of uneasiness on Wall Street, the VIX, a key gauge of volatility, was up 9 percent.
The Wall Street Journal has reported that an early market rally on Friday was squashed when it was announced that the talks between U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov about the upcoming vote on Crimea seceding from Ukraine broke down after just five hours.
According to experts, the Ukranian political crisis has solidified gold’s role as a perceived safe-haven from global unrest. The Wall Street Journal reports that some investors view gold “as a better bet than currencies or bonds during periods of geopolitical uncertainty because its value isn’t tied to a government or country.”
On Friday, gold prices reached highs of $1,388.40 an ounce, but pulled back slightly when Mr. Lavrov stated that the Russian government has no plans for a military intrusion into eastern Ukraine.
Sterling Smith, a futures specialist with Citigroup in Chicago, told The Wall Street Journal, “The remarks about Ukraine probably eased nerves for the moment, and that led to some profit-taking [by traders].”
Mr. Smith does not think investors will take Mr. Lavrov seriously as long as there is a buildup of Russian troops on the border with Ukraine. He stated, “As long as those forces remain on alert, they’re going to create tension, and that is desirable for the gold market.