Gold edges higher as EU presents united front

New York (Mar 21) Gold clawed back some of the losses seen earlier in the week, but gains were modest as traders fretted over the comments by Federal Reserve chair Janet Yellen on Wednesday.

The new head of the Fed hinted that interest rates may rise sooner than the market had been expecting, spooking both equity markets and the gold price.

A concerted move by European Union leaders to tighten sanctions on Russia helped the mood but gold was still heading for its worst weekly performance since last September.

Goldman Sachs was a negative influence as it repeated its view that the near-13% rise since the start of 20914 would not be sustained and the price would fall back to neater US$1,000.

It said the rally had been driven by weather causing the US economy to stutter, a spike in Chinese demand due to credit concerns, and increased geopolitical tension.

All of these helpful influences will fade, the broker believes, as real yields rise and data shows the US economy recovering.

Goldman’s end 2014 target for the gold price remains US$1,050.

Spot gold was US$6 higher at US$1,334 as trading got underway in the US, while silver was a shade higher at US$20.33 and platinum flat at US$1,429.

Platinum has yet to respond to the possibility of sanctions on Russia, but its associated metal palladium spike sharply today to a near three year high. Russia is the world’s largest producer of palladium.

Source: Proactive Investors