Gold holds near four-month high on China growth, Ukraine worries
Gold ticked lower on Tuesday but held near its strongest level in four months, underpinned by concerns about economic growth in China and nervousness over Ukraine after acting President Oleksander Turchinov warned that his country was close to default.business Updated: Feb 25, 2014 10:45 IST
Gold ticked lower on Tuesday but held near its strongest level in four months, underpinned by concerns about economic growth in China and nervousness over Ukraine after acting President Oleksander Turchinov warned that his country was close to default.
An increase in holdings on bullion-backed exchange-traded funds also could also reflect renewed interest from investors, although bullion will have to crack key technical resistance levels before it can move higher.
Gold eased 0.28% to $1,332.80 an ounce by 0322 GMT after rising as high as $1,338.60 on Monday, its strongest since late October. Gold has risen more than 10 percent this year.
"I think we are now pushing up against some pretty key technical barriers around $1,340 and up then around $1,350 as well. I think it's going to be hard to break given Chinese exchange premiums are very low now," said Victor Thianpiriya, an analyst with ANZ in Singapore.
"Having said that, if we get continued ructions out of Ukraine, I think that's one of the key things that can support gold and the market may continue to rally on safe-haven demand."
Premiums for 99.99% purity gold on the Shanghai Gold Exchange over cash gold was around 50 US cents a ounce to $1 on Tuesday, down from a high around $11 last week.
US gold was $1,333.00 an ounce, down 0.37%. It jumped to a four-month high of $1,339.20 on Monday.
Ukraine's fugitive president was indicted for "mass murder" on Monday over the shooting of demonstrators, as new leaders in Kiev sought urgent Western aid to make up for a loss of funding from Russia, which is angry at the overthrow of its ally.
Gold is often seen as a safe haven in times of political and economic turmoil SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.41% to 801.61 tonnes on Monday from 798.31 tonnes on Friday.
In the physical sector, Indian and Indonesian buyers purchased small amounts of gold bars, keeping premiums against the spot London prices steady at $1.20 to $1.50 an ounce in Singapore.
Gold demand in India is expected to be robust in 2014 and is likely to lead to increased smuggling so long as curbs on bullion imports remain, the World Gold Council.
"We are seeing some buying, and there are purchases from India. Other clients are still buying some quantity, about 20 to 30 kilos each time," said a dealer in Singapore. "Thailand is quiet because of the political situation there. The market has died down a lot."
Thai Prime Minister Yingluck Shinawatra, the target of anti-government protests in Bangkok, has been staying outside the capital and on Monday ruled out resigning despite a series of deadly attacks heaping pressure on her administration.