Gold slipped below short-term support at 1277.00 in overseas trading on Thursday, but rebounded sharply on short covering and a safe-haven bid upon a further escalation of tensions in Ukraine. The yellow metal quickly surged to new three-day highs and at one point was more than $20 off the intraday low, before easing back into the range.
Ukrainian military forces moved once again against pro-Russian protesters in eastern-Ukraine. Reportedly five were killed. That prompted a threat of retaliation from Russia. “If the regime in Kiev has begun using the army against the population inside the country, then this is undoubtedly a very serious crime,” said Russian President Vladamir Putin.
Russia did announce yet another new military “exorcize” on the Ukrainian border, this one to include aircraft. However, they may now have their pretext for a Crimean-style military incursion into eastern-Ukraine.
Russia accused the United States of directing the new Ukrainian military actions, noting that they occurred the day after U.S. Vice-President Joe Biden visited Kiev and pledged America’s support. Russian Defense Minister Sergei Shoigu also reacted to the arrival of a small contingent of U.S. troops in Poland, saying “Planned exercises by Nato forces in Poland and the Baltic countries do not foster normalisation of the situation surrounding Ukraine.”
One thing seems certain, the four-party agreement reached in Geneva last week to deescalate the situation in Ukraine, is pretty much dead.
U.S. durable goods orders rose 2.6% in March, beating expectation. However, initial jobless claims surged 24k to 329k.
There was some monetary saber rattling today as well. ECB President Draghi once again threatened that the central bank would engage in broad-based asset purchases as the euro remained resilient near 2-1/2 year highs. Draghi worries that the strong euro could derail the eurozone’s fragile economic recovery.
ECB governor Luc Coene chimed in too, saying that weak April inflation data may prompt policy action. Coene advocated for a cut to the refi rate as well as moving the deposit rate into negative territory. Eurozone CPI fell to just 0.5% y/y in March, and the the trend is pretty clearly negative.