Gold Trades Near 6-Month High on Ukraine to China Concern

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Gold Silver Neal Bhai.Gold traded near a six-month high in New York as investors weighed concern about tension between Ukraine and Russia and slowing Chinese economic growth against speculation prices climbed too fast.

The U.S. pressed Russia to cancel or postpone the March 16 referendum on Crimea joining Russia or at least agree not to follow through on a ballot result allowing Russia to absorb the Ukrainian region. U.S. President Barack Obama and U.S. allies in Europe are ratcheting up the threat of sanctions if Putin doesn’t take steps to defuse the situation.

Bullion advanced 14 percent this year, rebounding from the biggest annual drop since 1981, as concern economic growth in the U.S. and China is slowing and the crisis in Ukraine spurred demand for a haven.China’s retail sales, industrial output and investment last month trailed estimates, data showed today. The dollar reached the lowest level against the euro since 2011, while a technical gauge indicated gold may be set to retreat.

“Amid concerns about the Chinese economy and the geopolitical tensions between Russia and Ukraine, gold is clearly still in demand as a safe haven,” analysts at Commerzbank AG wrote in a report e-mailed today. “The price increase has also been driven by speculation, giving rise to further correction potential.”

London Gains

Gold for April delivery lost 0.1 percent to $1,368.90 an ounce by 7:32 a.m. on the Comex in New York. It reached earlier today $1,375.70, the highest since Sept. 10. Futures volume was 49 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery added 0.1 percent to $1,368.43 in London.

“The firmer euro versus the dollar is also helping gold,” Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone.

The standoff has boiled over into the biggest confrontation between Russia and the West since the end of theCold War. The U.S. and other members of the Group of Seven countries said in a statement yesterday that Russian annexation of Crimea “could have grave implications.”

“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.”

Relative Strength

The metal’s 14-day relative strength index was at 68.5, near a level of 70 that signals to some who study technical charts that prices may be set to decline. Holdings in gold-backed exchange-traded products fell 1.9 metric tons yesterday, the first drop in a week, data compiled by Bloomberg show.

Silver for May delivery lost 0.3 percent to $21.29 an ounce in New York. Platinum for April delivery was little changed at $1,475.90 an ounce. Palladium for June delivery declined 0.1 percent to $776.25 an ounce.

European Union foreign ministers are prepared to draft a series of punitive measures against Russia including asset freezes and visa curbs at the beginning of next week, German Chancellor Angela Merkel said in Warsaw. Russia is the biggest palladium miner.

Production losses at the world’s largest platinum companies caused by a seven-week strike yesterday eclipsed those from stoppages in 2012 as talks over pay with the South African union leading the walkout remain deadlocked. South Africa is the largest producer of platinum and second-biggest for palladium.