Gold strengthens as tensions rise in Ukraine
San Francisco (Feb 27) Gold futures advanced on Thursday as tensions in the Ukrainian political conflict escalated and lured investors to the perceived safety of the precious metal.
Gold also got a boost on the back of a climb in weekly U.S. jobless claims and decline in monthly durable goods orders.
Gold for April delivery (XCEC:GCJ4) gained $6.70, or 0.5%, to $1,334.70 an ounce on the Comex division of the New York Mercantile Exchange. Prices looked to recoup some of its recent losses, after falling 1.1% on Wednesday.
March silver (XCEC:SIH4) traded at $21.30 an ounce, up nearly 5 cents, or 0.2%, after briefly pulling back earlier. Prices for the metal lost 3.2% on Wednesday. The May contract for silver (XCEC:SIK4) was now the most active and it traded at $21.35, rising about 6 cents, or 0.3%.
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The gains came as volatility spread across financial markets after pro-Russian gunmen stormed parliament buildings in Ukraine’s Crimean region and raised Russian flags early Thursday. After the incident, Ukraine’s acting president warned that any movements by the Russian military in Crimea, aside from the Russian Black Sea fleet’s base in Sevastopol, would be treated as an act of aggression. NATO chief Anders Fogh Rasmussen, via his Twitter account, urged Russia not to take any action that would “escalate tension.”
“If this situation escalates it would put even more risk aversion into the world market place, which would likely be bullish for gold,” said Jim Wyckoff, senior analyst at Kitco.com.
Meanwhile, Federal Reserve Chairwoman Janet Yellen’s Congressional testimony was underway on Thursday after a two-week delay. See the live blog of the testimony.
“Yellen’s speech to the U.S. Senate Banking Committee will find traders and analysts parsing her words to see if Yellen reveals any clues regarding future monetary-policy moves by the Federal Reserve, including the pace of the Fed’s “tapering” of its monthly bond-buying program,” said Wyckoff.
On the economic front Thursday, Weekly jobless claims climbed to 348,000, higher than the total 335,000 economists polled by MarketWatch had expected. Durable goods orders fell 1% in January but economists had been looking for a decline of 2.5%. Prices for gold generally climbed after the data were released.
Elsewhere in metals trading, April platinum (XNYM:PLJ4) advanced $19, or 1.3%, to $1,448.10 an ounce. March palladium (XNYM:PAH4) put on $8, or 1.1%, to $739.50 an ounce, while June palladium (XNYM:PAM4), now the most-active contract, tacked on $8.30, or 1.1%, to $741.60 an ounce.
High-grade copper for March delivery (XCEC:HGH4) gave up 1.5 cents, or 0.5%, to $3.23 a pound, while the more active May contract (XCEC:HGK4) traded at $3.19, down nearly 3 cents, or 0.8%.
Metals-mining shares traded mostly higher, with the Philadelphia Gold and Silver Index (:XAU) up 1.6% and the NYSE Arca Gold Bugs Index (ARCX:HUI) adding 0.9%.
In a note Thursday, analysts at Morgan Stanley said they continue to believe gold equities will outperform the gold price. Specific equities will begin to trade at premium valuations to the group”on the back of lower political risk profiles, limited capex spend[ing] below industry average costs, and modest growth.”
Source; Finance-Yahoo
