Gold Climbs Toward Four-Month High as Ukraine Spurs Haven Demand

By Nicholas Larkin and Glenys Sim  Mar 11, 2014 8:08 AM ET

Bloomberg

Gold prices climbed toward a four-month high in New York as the standoff between Russia and Ukraine spurred demand for a haven. Silver advanced.

Ukraine began military drills as Russian forces tightened their hold on the Crimean peninsula, where residents will have the choice of joining Russia in a March 16 referendum. Ukraine’s prime minister prepared to meet U.S. President Barack Obama and western nations threatened further repercussions if Russia failed to defuse tensions.

Bullion advanced 12 percent this year, rebounding from the biggest annual drop since 1981, even as the Federal Reserve announced a $10 billion reduction to bond buying at each of its past two meetings, leaving purchases at $65 billion. Fed Chair Janet Yellen said last month the central bank will probably maintain its strategy of trimming the stimulus program. Global equities are within 1 percent of a six-year high set last week.

“The unsettled situation in the Ukraine continues to provide ongoing support for gold,” Edward Meir, an analyst at INTL FCStone Inc. in New York, said in a report written late last night. “Ukraine headlines and action in equities will likely be the most prominent price determinants for gold over the short-term.”

Gold for April delivery gained 0.6 percent to $1,350 an ounce by 11:54 a.m. on the Comex in New York. It reached $1,355 on March 3, the highest since Oct. 30. Futures trading volume was 10 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery climbed 0.8 percent to $1,349.93 in London.

ETP Holdings

Holdings in gold-backed exchange-traded products rose 8.4 metric tons yesterday, the most since October 2012, data compiled by Bloomberg show. Assets are at 1,762.5 tons after dropping to the lowest since October 2009 last month.

Ukraine is testing its military’s combat readiness and may mobilize 20,000 people to protect borders, Interior Minister Arsen Avakov said. Russia, which has vowed to defend the ethnic Russians who dominate Crimea after an uprising in Kiev, accused Ukraine of ignoring radicals in the nation’s east.

Silver for May delivery rose 1.4 percent to $21.195 an ounce in New York, after reaching $20.61 yesterday, the lowest since Feb. 14. Platinum for April delivery added 0.3 percent to $1,482.10 an ounce. Palladium for June delivery increased 0.2 percent to $778.40 an ounce. It touched $785 on March 6, the highest since March 8, 2013.

Leaders in the U.S. and Europe threatened Russia, the biggest miner of palladium, with sanctions for sending troops into Ukraine’s Crimea region. More than 70,000 members of the Association of Mineworkers and Construction Union have been on strike since Jan. 23 in South Africa, the largest producer of platinum and second-biggest for palladium.