Gold Prices Gain on Concerns About Russia, Ukraine

Frankfurt (Apr 25)  Gold prices rose Friday as investor worried about Russian troop movements near Ukraine's border.

Gold for June delivery, the most active contract, rose $10.80, or 0.8%, to trade at $1,301.40 a troy ounce, its highest price since April 17, on the Comex division of the New York Mercantile Exchange.

German Chancellor Angela Merkel on Friday told Russian President Vladimir Putin about her "great concern" regarding the situation in eastern Ukraine and called on Moscow to live up to the Geneva agreement that sought to defuse the Russia-Ukraine crisis. A day before, Ukrainian forces killed several militants in a firefight at a pro-Russian stronghold but halted their advance after Russia activated thousands of troops it had massed along the country's border.

"On one hand, it's a volatile situation, because we don't know what Russia will do next," said Ira Epstein, of the Linn Group. "But gold's upside is limited, because there is little chance of the conflict spilling beyond Ukraine."

Some investors consider gold as a safe place to store their wealth during periods of economic or geopolitical uncertainty, believing it will hold its value as other assets decline. For the last few weeks, investors have discounted rising tensions in Ukraine and focused on an improving U.S. economy, helping gold fall about 7% from its March high.

Investors are unlikely to sell gold into the weekend to avoid being caught flat-footed by fresh developments in Ukraine, said Peter Hug, director of global trading for Kitco Metals.

In other markets, platinum and palladium continued to climb after mining companies in South Africa said they hadn't reached a resolution with unions to settle the three-month strike there. South Africa is the source of about 37% of the world's palladium and about 80% of global platinum.

Platinum for July delivery rose $11, or 0.8%, to $1420.30 an ounce. Palladium for June delivery rose $1.75, or 0.2%, to $804.10 an ounce.