Gold traded near the highest price in almost three weeks in New York as investors weighed escalating tension in Ukraine against signs of an improving U.S. economy.
Government forces yesterday had four deaths in fighting that killed more than 30 rebels, Ukraine’s acting Interior Minister Arsen Avakov said on his Facebook account. Ukraine also sent specialized security units to the southern city of Odessa while neighboring Moldova put its borders on alert.
Gold climbed 8.8 percent this year, rebounding from the biggest annual drop since 1981. Prices will have a “slow grind” down and reach $1,050 an ounce by year-end as the U.S. economy strengthens, Goldman Sachs Group Inc. wrote in a report yesterday. U.S. services rose in April to the highest level since August, data showed yesterday.
“The situation in Ukraine appears unlikely to de-escalate any time soon,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., wrote in a report today. “As long as such a scenario prevails, gold is likely to find strong support. However, if we set aside the Ukrainian crisis, at the moment few factors are gold-supportive. Economic conditions in the U.S. are indicating strong signs of recovery.”
Gold for June delivery was little changed at $1,308.20 by 7:43 a.m. on the Comex in New York. It reached $1,315.80 yesterday, the highest since April 15. Futures volume was 8.7 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery fell 0.2 percent to $1,308.05 in London, according to Bloomberg generic pricing.
Efforts by the government in Kiev to expel insurgents from the easternmost regions are at risk of stalling less than three weeks before the country’s presidential election. German Chancellor Angela Merkel and U.S. President Barack Obama have set the May 25 vote as the trigger for possible economic sanctions against Russia if it fails to pull back its support for separatists.
Speculators are the least bullish on the metal in 11 weeks, partly amid signs that the U.S. economy is accelerating out of its winter retreat, Commodity Futures Trading Commission data show. The Federal Reserve reduced monthly asset buying to $45 billion on April 30 with the fourth straight $10 billion cut, and policy makers said further reductions in “measured steps” are likely.
Silver for July delivery gained 0.5 percent to $19.66 an ounce in New York. Platinum for July delivery was little changed at $1,449 an ounce. Palladium for June delivery lost 0.3 percent to $814.15 an ounce. It reached $819.30 on May 1, the highest since August 2011.
Russia is the biggest supplier of palladium. More than 70,000 mine workers have been on strike since January in South Africa, the top platinum producer and the second-largest for palladium.