Gold remains somewhat defensive below $1300 on continued hopes over a deescalation of tensions in Ukraine and the latest bout of uncertainty about Fed policy expectations. ‘Hope’ and ‘uncertainty’ are the two operative words here.
Pro-Russian separatists in Ukraine appear determined to proceed with an autonomy vote on May 11, despite Russian President Vladamir Putin’s apparent withdrawal of support yesterday. Mr. Putin seems to be in favor of renewed talks between Kiev and the separatists, but there are considerable doubts about his motives. As The New York Times put it: What is unclear is “whether he was truly reversing course on Ukraine or if this was just another of his judo-inspired feints.”
Perhaps he has the intent to delay the presidential election slated for 25-May. Putin has maintained that the government currently in place as a result of the popular uprising in February — which ousting pro-Russian President Viktor Yanukovych — is illegitimate. Such a claim becomes more difficult in the wake of an election.
Janet Yellen appeared before the Senate Budget Committee and reiterated her JOC testimony from yesterday. There is some consensus that the most newsworthy item from the two-days of testimony was Yellen’s heightened concern about the housing market:
In an interview yesterday, James Rickards repeated his assertion that the Fed tapered into weakness, calling into question the reliability of Fed forecasts. Rickards thinks the Fed may be forced to pause the taper in July, but even if QE3 is fully wound down, he thinks the Fed will be back buying assets in 2015.