Gold Gains on Safe Haven Flows After Turkey-Russia Incident

News reports that Turkish jets have shot down a Russian military aircraft are putting a bid into the safe-haven gold market in early U.S. trading Tuesday. Short covering and bargain hunting are also featured after gold prices recently hit a 5.5-year low. February Comex gold was last up $10.70 at $1,077.40 an ounce. March Comex silver was last up $0.104 at $14.165 an ounce.

There is risk aversion in the marketplace Tuesday as reports said a Russian warplane was shot down by Turkey’s military. The Russian jet was near the Syrian border when Turkish fighter jets shot it down, reports said. Turkish officials said the Russian jet was over its territory and ignored warnings to turn back. However, Russia said its plane was not in Turkey when it was shot down. NATO officials are meeting later Tuesday in Brussels to discuss the matter. Russian president Vladimir Putin said his country would retaliate to the downing of its jet.

World stock markets were pressured and U.S. Treasuries were lifted on the Turkey-Russia conflict. U.S. stock indexes are pointed to solidly lower openings today.

There was an important U.S. economic report just out. The second estimate of third-quarter gross domestic product. The GDP figure came in at up 2.1% versus the last estimate of up 1.5%. The latest reading was right in line with market expectations and had very little impact on the marketplace.

Traders and investors are still awaiting the mid-December FOMC meeting and anticipating the first U.S. interest rate increase in nine years.

via Kitco

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza