Gold And Silver Rally As Geopolitical Risks Multiply

  • Posted Friday, August 01, 2014 at 01:57 PM

Los Angeles CA, August 1 (Tangible Investments) - by James O’Dell - Gold and Silver prices rallied on a worse than expected non-farm payrolls report on Friday that saw just 209,000 new jobs added in July. Gold rallied on the news to $1,291.60 an ounce after easing $13.10 or 1.01 percent on Thursday, to close at $1,282.15 an ounce as the dollar hovered near 10 month highs, while the Dow ended July by plunging 317 points. The price of Silver dipped $0.23 or 1.11 percent to close at $20.40 an ounce, while the Gold/Silver ratio inched higher to 62.85.

China's demand for physical Gold picked up following the price decline, says HSBC. “Bullion’s premium on the Shanghai Gold Exchange, a gauge on China’s Gold appetite, rose to USD3.20/oz, the highest since 13 May,” wrote the bank in a report on Thursday. “Despite a seasonally weak period for Gold buying, physical buyers have reacted positively to cheaper prices. This may help stem further price losses, in our view.”

Geopolitical risks in nations such as Ukraine, Israel, Iraq, Libya and today in Argentina with its default on sovereign debt and Portugal after the collapse of Banco Espírito Santo shares are still seen as broadly supportive of Gold. It was the second time in 13 years that Argentina has defaulted on its sovereign debt. Argentina’s borrowing costs could soar now that Standard & Poor’s has deemed the country to be in default, adding further pressure on the nation’s already struggling economy.

Shares of Banco Espírito Santo SA fell more than 50 percent on Thursday, after Portugal’s biggest bank reported, late Wednesday, a record $4.68 billion net loss for the second quarter. Trading in the bank's shares was suspended on Thursday morning but when trading resumed around two hours later the shares were trading at half the previous day’s closing price.

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