Gold Rises to 1-Week High as Ukraine to Gaza Spurs Demand
New York (July 29) Gold rose to a one-week high in New York as tension over Ukraine and in the Middle East increased demand for a haven. Palladium traded near a 13-year high.
The U.S. and European Union may move as soon as today to impose tougher sanctions against Russia as Vladimir Putin’s government sought replacements for defense imports and considered restrictions on some agriculture products from America and its allies. Israeli Prime Minister Benjamin Netanyahu told his country to brace for an extended military campaign in Gaza.
Bullion is still set for a monthly decline on the outlook for higher U.S. borrowing costs as the world’s largest economy improves. The dollar reached a five-week high against a basket of 10 major currencies before Federal Reserve officials start a two-day meeting today. Gold slumped 28 percent last year on expectations for reduced U.S. stimulus.
Geopolitical tensions “should lend support to demand for gold as a safe haven,” analysts at Commerzbank AG wrote today in a report. “Significant upward leaps in price are unlikely in view of the two-day meeting of the U.S Federal Reserve that begins today, since market participants will first want to wait and see what its outcome is.”
Gold for December delivery rose 0.4 percent to $1,310.80 an ounce by 7:50 a.m. on the Comex in New York. It reached $1,314.60, the highest since July 22. Bullion for immediate delivery increased 0.3 percent to $1,308.35 in London, according to Bloomberg generic pricing.
Trading Volume
Futures trading volume was 80 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Interest-rate increases may come “sooner and be more rapid than currently envisioned” if the labor market continues to improve more quickly than anticipated, Fed Chair Janet Yellen told lawmakers this month.
The new sanctions being readied because of the fighting in Ukraine are on “key sectors” of Russia’s economy, U.S. Deputy National Security Adviser Tony Blinken said yesterday. Russia also signaled possible retaliation, announcing yesterday that it may ban imports of chicken from the U.S. and fruit from Europe because of concern about contamination.
Silver for September delivery gained 0.7 percent to $20.705 an ounce in New York. Platinum for October delivery was little changed at $1,489.50 an ounce. Palladium for September delivery was 0.4 percent higher at $884.10 an ounce. It reached a 13-year high of $890 on July 17.
Platinum and palladium have gained this year as restricted output and rising usage in cars added to supply shortages. Northam Platinum Ltd. said yesterday production at the Zondereinde mine in South Africa, the biggest platinum producing country, will be reduced by half following an accident. Russia is the top palladium supplier, with South Africa the next largest.
Source: Bloomberg
