Gold Holds Below $1,300 on Easing Ukraine Concerns
May 8, 2014 2:59 PM EST
Gold Near Two-week High as Ukraine Tensions Boost Safe-haven Bids
Russian President Vladimir Putin called on pro-Moscow separatists in Ukraine to postpone a vote on secession just five days before it was to be held, potentially pulling Ukraine back from the brink of violent dismemberment.
In what could be a breakthrough in the worst crisis between East and West since the Cold War, Putin also announced he was pulling Russian troops back from the Ukrainian border.
Much of gold's 7 percent gains this year has been from geopolitical tensions over Ukraine. Gold is often bought as a safe-haven investment at times of economic and political uncertainty.
"The outlook for gold from here is dependent on how things evolve in Ukraine," said Barnabas Gan, an analyst at OCBC Bank.
"We are still bearish on gold prices and expect prices to be $1,150 by year-end on expectations that the Ukraine situation will not blow up," he said.
Spot gold was little changed at $1,289.50 an ounce by 0340 GMT, after losing 1.4 percent on Wednesday - its biggest one-day drop since April 15. U.S. gold also stabilized after a similar drop overnight.
"The negative momentum built up overnight is likely to skew market sentiments towards the bears. The lacklustre rebound this morning testifies to the lack of meaningful buying interest even after an impulsive plunge," Phillip Futures said in a note.
Bullion was also affected by gains in stocks after comments from Federal Reserve Chair Janet Yellen.
A slumping housing market and geopolitical tensions risk undermining the U.S. economy and bear close watching by the Fed, the central bank's chief said in a testimony to Congress, adding that the economy was still in need of lots of support given the "considerable slack" in the labour market.
In the physical markets, gold premiums in top buyer China rose to about $4 an ounce on Thursday from $2.50 in the previous session, indicating increased buying interest.