Gold was in greater demand as a safe haven again yesterday and climbed by over 1.5% for a time to $1,310 per troy ounce on the back of increased tensions in the Ukraine-Russia conflict. Representatives of the Polish and US governments, and of NATO, appeared concerned that Russia, having noticeably stepped up its military presence near the border to Ukraine, might invade its neighbour on the pretext of wishing to secure peace. The fact that yields on 10-year US government bonds fell yesterday to their lowest level since the end of May also played their part in the price rise. Silver has been pulled upwards in gold’s slipstream and has exceeded the $20 per troy ounce mark again. In the short term, gold in particular should remain well-supported by the geopolitical risks, though continued weak physical demand is likely to weigh on prices. Following subdued gold demand in China and India, Turkey also reported weak import figures yesterday: in July, gold imports declined to just 1.5 tons, putting them at their lowest level since February. Compare this to the month before, when 24.3 tons of gold were imported. Today will see investors focus on the ECB meeting, though we do not expect any surprises from it. Additional stimulus measures appear somewhat unlikely in the near future, and ECB President Draghi will probably address the low inflation rate in the press conference.
