Gold Trades Below Two-Week High as China Weighed Against Fed
New York (Apr 11) Gold traded below a two-week high as investors weighed signs of slowing demand from China against the outlook for U.S. stimulus and tension in Ukraine.
Volume for the benchmark gold contract in China, the largest user, was about 40 percent less than three weeks ago, Shanghai Gold Exchange data show. Gold reached $1,324.61 an ounce yesterday, the highest since March 24, a day after minutes of the Federal Reserve’s March meeting showed that several policy makers said projections for an interest-rate rise might be overstated.
The Bloomberg Dollar Spot Index, a measure against 10 major currencies, was little changed above a five-month low. Fed Chair Janet Yellen said last week that the economy will need stimulus for “some time,” after saying in March that rates might start to rise about six months after monthly asset purchases end. Gold reached a six-month high on March 17 amid turmoil over Ukraine, and the U.S. threatened Russia with more sanctions for its incursion into its neighbor.
“Physical demand from China continues to be restrained,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report. “Gold was underpinned by weakness in the dollar. Market participants will keep an eye on developments between Ukraine and Russia.”
Bullion for immediate delivery lost 0.2 percent to $1,316.95 by 9:09 a.m. in London, according to Bloomberg generic pricing. The metal rose 1 percent this week. Gold for June delivery fell 0.3 percent to $1,317 on the Comex in New York. Futures trading volume was 31 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
Interest Rates
“You’ll see support for the gold price if the U.S. aren’t going to lift interest rates in the short-term as aggressively as people expected and there’s still anxiety between Russia and Ukraine,” Tom Price, an analyst at UBS AG, said in a Bloomberg Television interview from Sydney.
Silver for immediate delivery declined 0.5 percent to $19.9533 an ounce in London. Platinum was little changed at $1,458.13 an ounce. Palladium fell 0.4 percent to $787.78 an ounce. It climbed to $801.53 on March 24, the highest since August 2011.
Russia is the biggest supplier of palladium. The standoff between the country and the U.S. and its European allies is dominating talks of finance chiefs gathering for the spring meetings of the International Monetary Fund and World Bank, which start today.
U.S. Treasury Secretary Jacob J. Lew delivered the warning on additional sanctions in talks with his Russian counterpart, Anton Siluanov. It was made just hours after Russian President Vladimir Putin threatened to halt natural gas shipments to Ukraine.
