1:01 pm - Tuesday May 23, 2017

Gold hits six-month high

Gold rose to a six-month high on Friday as investors turned to bullion as a safe-haven from East-West tensions before a vote planned for Sunday on whether Ukraine’s Crimea region should join Russia.

Moscow shipped more troops and armour into Crimea on Friday and repeated its threat to invade other parts of Ukraine, showing no sign of heeding Western pleas to back off from a Cold War-style confrontation.

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Russia’s stock markets tumbled and the cost of insuring its debt soared on the last day of trading before pro-Moscow authorities in Crimea hold a referendum on joining Russia, a move all but certain to lead to US and European Union sanctions on Monday.

‘There are people here with possible concerns that you will see a heavy price spike (in gold) if this vote does go in,’ said Thomas Capalbo, a precious metals trader at Newedge, a brokerage in New York. ‘Gold is up on situational buying.’

Spot gold rose as much as 1.4 per cent to its highest level since September 9 at $1,387.90 an ounce early in the session before it later pared gains.

US gold futures settled up $6.60 at $1,379 an ounce, with trading volume about 30 per cent above its 30-day average, preliminary Reuters data showed.

The metal has gained 3 per cent this week, also helped by China’s first corporate bond default and fears of slowdown in the world’s second-largest economy.

Gold was also supported by Friday’s data showing US consumer sentiment weakened in early March.

The market was awaiting the US Federal Reserve’s policy meeting on March 18-19. The central bank is expected to announce another $10 billion cut to its bond-buying stimulus.

US economic data showing that growth has been hurt by severe cold weather has recently hit the dollar, which fell 0.2 per cent against a basket of currencies after weak US producer prices on Friday.

Global uncertainties sent investors looking for gold, with holdings in SPDR Gold Trust – the world’s largest gold-backed exchange-traded fund – rising 2.1 tonnes to 813.30 tonnes on Thursday.

Among other precious metals, silver followed gold’s moves, with a 1 per cent increase to $21.35 an ounce. Platinum was down 0.6 per cent at $1,463 an ounce, while palladium fell 0.5 per cent to $769.50 an ounce.

Courtesy- The New Age


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