Gold gains amid tensions in Ukraine and Middle East, against strengthening dollar and US economy
Gold gains for a second day, amid conflicts raging in Ukraine and in the Middle East; meanwhile the dollar extends its rally against the euro, on diverging monetary policy paths of the ECB and the Fed.
It was a second day of gains for gold on remaining tensions between Russia and Ukraine, which resulted in elevated demand for the safe haven, despite the strengthening dollar and US economy.
In Singapore by 2.28 pm, spot gold was trading 0.3 percent up,at $1,284.83 per ounce. August 21 saw a drop to $1,273.14, the lowest since June 18, because of speculations on the Fed raising borrowing costs earlier than forecasts suggest.
Following President Putin’s statement of positive results from talks with Ukrainian counterpart Poroshenko, eastern Ukraine fights went on. In this atmosphere, the USD touched its highest value against the euro in a year.
The European Central Bank is expected to increase stimulus on its meeting next week. That provides certain support for bullion in spite of solid US economic figures, dollar strength and rising US bond yields.For this year, gold has rebounded by 6.9 percent with hostilities in Ukraine and in the Middle East keeping investors nervous.
Immediate delivery silver gained 0.5 percent, to $19.4594 per ounce. For spot platinum the rise was 0.4 percent, to $1,422.94 per ounce. Palladium was 0.2 percent up, to $888.19 per ounce.
Gold’s September and October performance is deemed to be pretty good, historically speaking. The Indian festival period, from late August until October, followed by the wedding season is busy time for the precious metal purchases. A hike in Chinese purchases can also be anticipated by year-end, in the run-up to February’s Chinese Lunar New Year celebrations. For 2013, China outpaced India as the biggest gold consumer.
The yellow metal’s 28 percent meltdown in 2013 was the heaviest in over three decades. It triggered larger purchasing of jewelry and coins in Asia, despite India’s government-imposed shrinking of imports to rein a current-account deficit. For next month, gold is expected to be behind the historical average, with expectations of modest Chinese demand, until a price drop occurs towards the $1,200 zone.
