Gold Higher On Safe-Haven Demand, Short Covering

New York (Aug 6)  Gold prices are solidly higher and pushed above the key $1,300.00 level in early U.S. trading Wednesday. The yellow metal is boosted by safe-haven demand and short covering on renewed geopolitical concerns. December Comex gold was last up $14.30 at $1,298.30 an ounce. Spot gold was last quoted up $8.20 at $1,297.50. December Comex silver last traded up $0.101 at $20.00 an ounce.

The feature in the market place Wednesday morning is the sell-off in world stock markets, following the U.S. lead Tuesday afternoon, as investors and traders exhibit keener “risk-off” attitudes. The U.S. dollar, gold and U.S. Treasuries are seeing safe-haven buying support from renewed attention on the Russia-Ukraine crisis. Reports said Russian president Putin is getting ready to retaliate after his country has been slapped with economic sanctions recently. There were reports Tuesday afternoon that Russian troops were massing on the Ukraine border. Even though that news was not fresh, it was partly credited with sinking the U.S. stock market Tuesday afternoon.

In other overnight news, the yield on the German five-year bond (the Bobl) dropped to a record low Wednesday, at 0.28%, down from 0.33% last month. The record-low German bond yield is another clue of the heightened risk aversion presently in the market place.

Italy’s GDP was reported down 0.2% in the second quarter from the first, and down 0.3% year-on-year. This means Italy’s economy has slipped back into recession, which is another bearish clue for the collective European Union economy.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the international trade report, and the weekly DOE liquid energy stocks report.

Source: FORBES