Precious metals continued probing higher yesterday, as several factors emerged that support gold and have investors looking for a bit of insurance as gold begins the New Year with the label “safe-haven” once again being applied. In no particular order, here are a few factors that have brought buyers to our market over the past few days and are likely to be supportive going forward:
1. U.S. and global equities are under pressure which may bring “new money” to our market as investors rotate out of equities and look for other investment opportunities.
2. Economic data in the U.S. has turned mixed which has many economists and commentators suggesting a rate hike in 2015 is not a certainty and if it does happen is likely to be closer to year-end. Yesterday saw the yield on the 10-year bond slip below 2.00 percent.
3. The fall in crude oil may actually be good for gold as it is weighing heavily on the stock market and highlights macroeconomic concerns in many of the oil producing nations.
4. Concerns continue to rise over affairs in Russia as the Ruble continues to weaken.
5. Concerns over the future of the EU are front and center as uncertainty with regard to Greece mounts.
6. The Financial Times reported this week that the likelihood of a default by the Ukraine later this year is a real possibility as their bonds trade at record lows and their interest rates are soaring higher.
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