Precious Metals Strong On Crimea Worries While Copper Tumbles On China Worries

Gold was just below $1,382 per ounce, the six-month high it reached last week. The Japanese yen weakened 0.2 per cent to 101.5 against the US dollar after gaining for five straight sessions. China’s markets, which are mostly closed to foreign investors, were heading in a different direction. The Shanghai Composite was up 0.4 per cent after the People’s Bank of China doubled the renminbi’s trading band to 2 per cent on the weekend – a move supposed to signal “gradual reform” of the country’s exchange rate regime. High quality global journalism requires investment. Western powers have warned that sanctions against Russia could begin as early as Monday. The heightened tensions set back global equity markets, including in Asia where the region had little economic data to chew on.

Gold was trading near its highest level in over six months on Monday on weaker equities and as Crimea voted to join Russia, heightening tensions between Moscow and the West. Bullion has gained 15 per cent this year as mounting geopolitical tensions and fears over slowing economic growth spurred demand for the metal seen as a safe-haven asset. Gold was trading flat at $1,381.34 an ounce in the Asian session. Silver is flat also this morning at 21.403. Platinum and palladium on the other hand are both in the green at 1476.95 and 778.40 respectively.

Fresh money has been flowing into gold-backed exchange-traded funds as investors seek safety from riskier assets such as equities. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 3.29 tonnes to 816.59 tonnes on Friday. Hedge funds and money managers raised their bullish bets in gold futures and options for a fifth consecutive week to the most bullish stance since mid-December 2012, according to Friday data from the Commodity Futures Trading Commission.

Copper in London traded near a 44-month low as China doubled the yuan’s trading limits versus the dollar. Copper this morning is trading at 2.948 up a few pips off recent lows as traders take advantage of the low prices to buy up the commodity. After years of turning a blind eye, China’s government is finally getting serious about reining in the country’s poorly regulated shadow banking system, which has grown so big that it could derail the world’s second-largest economy. Beijing has also moved to restrict credit to steel smelters at a time when real demand is slowing fast. Official data showed an 18pc drop in China’s exports last month. Factory-gate consumption is equally weak. China imported a total of 380,000 tonnes of raw copper and copper products in February, down sharply from the 536,480 tonnes shipped into the country the previous month.