Gold Drops From Four-Month High as Ukraine Tension Seen Easing
London (Mar 4) Gold fell from the highest price in more than four months after a report that Russia ended military exercises in its western area as scheduled, lessening demand for a haven.
Bullion rose as much as 2.1 percent yesterday as Ukraine said Russia ordered Ukrainian warships in Crimea to surrender. Russia’s President Vladimir Putin ordered troops to return to bases, Interfax said, citing the president’s spokesman Dmitry Peskov.
Gold gained 11 percent this year, rebounding from the biggest annual decline since 1981, as signs of slowing economic growth increased demand. U.S. data yesterday showed that manufacturing and consumer spending beat analysts’ estimates after Federal Reserve Chair Janet Yellen said last week the central bank is “open to reconsidering” the pace of stimulus cutbacks should the economy weaken.
“Movement in gold prices is likely to be driven by events unfolding between Ukraine and Russia,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report. “We believe that much of the risk premium has already been priced into gold in the past few sessions. Gold could come under a heavy bout of profit-taking pressure in case Ukrainian worries ease and forthcoming U.S. data this week top market estimates.”
Bullion for immediate delivery fell 0.8 percent to $1,339.25 an ounce by 10:07 a.m. in London. It reached $1,354.87 yesterday, the highest since Oct. 30. Gold for April delivery slid 0.8 percent to $1,339.20 on the Comex in New York, where futures trading volume was 38 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
Ukraine Tension
Russia’s ambassador to the United Nations said yesterday that threats posed by extremists legitimized his country’s intervention in Crimea, where Russian speakers make up the majority. Russia’s parliament over the weekend granted Putin the authority to use force in Ukraine. Troops had moved to western and central military districts as part of military exercises, the Russian Defense Ministry said in a statement last month. U.S. Secretary of State John Kerry arrives in Kiev today.
“The current round of gains may retrace should the tension in the Ukraine ease,” Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group, wrote in a note before prices retreated today. Gold probably extended losses after the Interfax report, Thianpiriya said in a separate e-mail.
The 14-day relative strength index climbed yesterday above 70, signaling to those who study technical charts that prices may be set to decline. It was at 65.1 today.
Source: Bloomberg
