Gold Trades Near 6 Month High Before Crimea Referendum

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gsr-goldGold traded near the highest level in six months as escalating tensions in Ukraine, before a vote in Crimea on breaking away to join Russia, boosted demand for the precious metal as a store of value.

U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov are meeting in London today to discuss the crisis in Ukraine. President Barack Obama and German Chancellor Angela Merkel have warned that the March 16 vote in Crimea has no international legitimacy.

“Bullion is trading mostly on risk sentiment at the moment helped by a technically strong uptrend,” Andrey Kryuchenkov, an analyst at VTB Capital Plc in London, wrote in a note today. “The ongoing uncertainty over Ukraine will be in focus today and on Monday with the Crimean succession referendum stealing headlines.”

Bullion for April delivery rose 0.3 percent to $1,376.70 an ounce by 8:32 a.m. on the Comex in New York, where futures trading volumes were 13 percent lower than the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Prices rose earlier to $1,377.30 an ounce, the highest since Sept. 10. Gold for immediate delivery rose 0.5 percent to $1,376.77 an ounce in London.

Bullion, up 14 percent this year, is heading for a second weekly advance on demand for a haven as turmoil in Ukraine hurt emerging-market assets already weakened by cuts to U.S. stimulus, while growth slowed in China, the largest consumer.

Faltering China

The MSCI All-Country World Index of equities retreated 1.8 percent this year on concern China’s growth is faltering while the Bloomberg Dollar Index, which tracks the greenback against 10 currencies, is 0.5 percent lower.

Bullion’s 14-day relative strength index was at about 70, signaling to some who study technical charts that prices may be set to decline. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, increased to 813.3 metric tons yesterday, the highest since Dec. 20.

“Gold is buoyed by what’s happening in Ukraine and increasing worries about a slowdown in China’s economy,” said Ethan Wai, a research analyst at Wing Fung Financial Group, a Hong Kong-based gold trader and refiner. “The pullback in equities and a weaker dollar are supportive.”

Silver for May delivery added 1.4 percent to $21.485 an ounce in New York. Platinum for April delivery was little changed at $1,480.80 an ounce and palladium for June delivery rose 0.2 percent to $780.35 an ounce.