Gold pares losses as Ukraine prompts haven bids

San Francisco (Aug 15)  Gold prices eased some losses on Friday as global equity markets retreated on a report of Ukraine forces engaging a Russian armored column on Ukrainian soil.

A Ukrainian military spokesman said that Ukraine forces had tracked the armored column after it crossed the border. The Ukrainian president told British authorities that Ukraine artillery had destroyed part of the armored equipment that crossed the border during the night, according to a presidential website.

"Risk has evaporated from the markets after the Ukraine headlines,'' said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "We have seen investors use the yen and Swiss franc as safe harbors.''

Spot gold was last down 0.7 percent at $1,306 an ounce, off an earlier low of $1,292, while U.S. gold futures for December delivery fell $10 to $1,306 an ounce.

Analysts said soft demand for gold in China and India was also weighing on the precious metal.
Demand for gold in Asia, home of the world's main bullion consumers, was weak overnight, precious metals group MKS said in a note on Friday.
"Asia was more of the same today in the precious, signing off an exceptionally quiet week with yet another quiet session," it said. "Gold opened the day at $1,312 and did not deviate far from that level ... Some very light retail buying was seen, but they were the only notable flows we saw."

Persistently soft gold demand in Asia has stoked worries that buying will fail to pick up in the second half, when it is normally stronger, traders and dealers said.

The World Gold Council said in a report on Thursday that global gold demand fell 16 percent in the second quarter, with China and India between them accounting for over half of the year-on-year decline in bar and coin demand.

Source: Reuters