Gold slipped back below $1300 in thin holiday trading on Monday. The London market was closed in observance of Easter Monday.
ETF outflows seen last week may have weighed on sentiment somewhat. The largest gold back ETF reportedly saw nearly a 10 tonne drop in its holdings. However, we know that gold coming out of the ETF vaults has been making its way to Asia to satisfy seemingly insatiable demand. That flow of physical metal has been well documented over the past year.
The four-party talks in Geneva last week regarding Ukraine may have lessened the geopolitical risks somewhat, but it didn’t take long for the rhetoric to start heating up once again. Russia accused Ukraine of violating the agreement just reached in Geneva, following a weekend shooting in Slavyansk, which prompted the pro-Russian mayor of that Ukrainian city to call for Russian to send ‘peace-keeping’ troops.
Ukraine claims that Russian troops are already operating in eastern-Ukraine, which would be a very clear violation of the four-party agreement. The New York Times and CNN published photos of the so-called “green men.” The Crimean annexation started with the infiltration of Russian special forces.
The Obama administration has acknowledged these photos as being genuine. Things could be heating up again in Eastern Europe, even before they truly cooled. It will now be interesting to see how American and its allies react.