Gold Climbs to Two-Week High as Dollar to Ukraine Spur Demand
London (Apr 8) Gold climbed to the highest price in almost two weeks in London as a weaker dollar and tension between Russia and the West increased demand for a haven.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, reached the lowest since November before minutes of the Federal Reserve’s March meeting are released tomorrow. Fed Chair Janet Yellen said last month the central bank may start to increase interest rates about six months after ending its asset-buying program.
Gold gained 9 percent this year, rebounding from the biggest annual drop in more than three decades, and reached a six-month high on March 17 as tension over Ukraine spurred demand for a haven. Ukrainian authorities sent security forces to Kharkiv to clear the country’s second-biggest city of separatists as Russia traded accusations with the U.S. and warned that its neighbor’s crackdown risks sparking civil war.
The weaker dollar “is definitely supporting gold,” Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA, a Geneva-based refiner, said today by phone. “Fundamentally, gold is still bullish on the back of Russia and Ukraine.”
Bullion for immediate delivery rose 1 percent to $1,310.16 an ounce by 9:43 a.m. in London, according to Bloomberg generic pricing. It reached $1,310.95, the highest since March 26. Gold for June delivery climbed 0.9 percent to $1,310.50 on the Comex in New York, on futures trading volume that was 27 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
ETP Holdings
Holdings in gold-backed exchange-traded products are at the lowest level in a month, data compiled by Bloomberg show. Morgan Stanley is forecasting bullion to average $1,150 in the fourth quarter on the outlook for rising interest rates and as investors favor other assets such as equities and the dollar. U.S. policy makers at their March meeting reduced monthly bond purchases by $10 billion to $55 billion.
“The Fed minutes will be the focal point for the gold market this week especially at a time of escalating tension in Ukraine,” said Liu Xu, precious metals analyst at Capital Futures Co. in Beijing.
Silver for immediate delivery rose 1.1 percent to $20.0908 an ounce in London. Platinum added 0.5 percent to $1,436.75 an ounce. ETP holdings of the metal increased 1.1 percent to a record 81.4 metric tons yesterday, data compiled by Bloomberg show. Palladium gained 1.2 percent to $775.75 an ounce. Prices, which slid 3.1 percent yesterday in the biggest daily decline since June, climbed to $801.53 on March 24, the highest since August 2011.
