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Thursday, March 13, 2014
Gold Climbs to Six-Month High as Crisis in Ukraine Spurs Demand
Gold advanced to the highest level in almost six months as worsening tension between Ukraine and Russia boosted haven demand, with prices heading for the best run of weekly gains since August 2011.
Bullion for immediate delivery rose as much as 0.6 percent to $1,374.69 an ounce, the highest level since Sept. 19, climbing for a third day. Gold traded at $1,373.39 at 1:04 p.m. in Singapore, poised for a sixth weekly gain.
The precious metal advanced 14 percent this year as demand for a store of value increased on the confrontation in Ukraine and concern growth in China is slowing. Crimea is preparing for a March 16 referendum that may pave the way for the Ukrainian region to join Russia. Barack Obama met Prime Minister Arseniy Yatsenyuk yesterday and said the U.S. stood with Ukraine to protect its sovereignty and territory.
“Gold should be supported as long as the situation in Ukraine remains uncertain,” said Zhu Siquan, an analyst at GF Futures Co., a unit of the Guangzhou-based company that bought Natixis Commodity Markets Ltd. “Technically, gold is starting to look a bit overbought.”
Gold’s 14-day relative strength index climbed to 70.5, signaling to those who study charts that prices may be set to reverse. Assets in the SPDR Gold Trust declined yesterday from the highest level this year, contracting for the first time since Feb. 19.
The confrontation in Ukraine has become the biggest between Russia and the West since the end of the Cold War, with U.S. President Obama and allies ratcheting up the threat of sanctions. Government officials and businessmen in Russia are readying for trade curbs resembling those applied to Iran, according to four people with knowledge of the preparations.
Gold jumped 1.3 percent yesterday, the most in a week, after Ukraine warned that Russia is massing troops near its border. Crimea can be integrated into Russia within two months if its voters decide the territory should cease to be a part of Ukraine, said the region’s Premier Sergei Aksenov.
Diplomatic efforts to defuse the crisis continue today. U.S. Secretary of State John Kerry is due to meet with his Russian counterpart, Sergei Lavrov, in London, while Yatsenyuk is scheduled to speak to the United Nations Security Council.
Bullion rebounded this year even as the Federal Reserve, which next meets March 18-19, announced reductions to its bond-buying program at each of its past two meetings. Data today may show retail spending, which accounts for 70 percent of the U.S. economy, rose 0.2 percent in February from a month earlier.
Gold for April delivery climbed as much as 0.3 percent to $1,374.90 an ounce on the Comex in New York, the highest price since Sept. 19, and was at $1,373.10.
Silver for immediate delivery rose as much as 0.8 percent to $21.469 an ounce and was at $21.3885. Platinum was at $1,474.88 an ounce from $1,475.50 yesterday, while palladium was at $775.85 from $776.08.