Gold futures added during early trading in Europe today, as tensions in Ukraine grew. More separatists actions, alongside only limited successes by Kiev bumped-up safe-haven demand. Elsewhere, the US economy saw further reports of improvement, pressuring the precious metal.
Gold futures due in June traded for $1 312.7 per troy ounce at 8:56 GMT on the COMEX in New York today, adding 0.31% to Tuesdays closing price. Daily high and low stood at $1 315.0 and $1 306.9 per troy ounce. Yesterday the contract lost 0.05%, after on Monday the precious metal reached a three-week peak at $1 315.8, on news of bitter fighting in Ukraine.
The conflict in Ukraine has been supporting safe-haven demand recently, helping gold add more than 9% this year, and the crisis continues to deepen.
The Ukrainian government’s so-called “anti-terrorist” operation, taking place around the pro-Russian stronghold of Sloviansk, resulted in a bloody battle over the last few days. Kiev reported at least four government soldiers were killed and about 30 injured, and a helicopter downed, while at least 30 rebels were reported dead. The city remains in rebel hands, though blockaded by the military.
Earlier today, pro-Russian separatists in Donetsk have proclaimed a “Peoples Republic” and are preparing an independence referendum on Sunday, the BBC reported. US Secretary of State John Kerry said the US reject the “illegal effort to further divide Ukraine.”
Russian Foreign Minister Sergei Lavrov dismissed the possibility of more peace talks, if the format remained the same. He demanded the pro-Russian opposition in Ukraine have representatives, or else “…[the West, Kiev and Moscow] would just go round in circles.” He added that Ukraine should postpone the presidential election scheduled for May 25th, amid the escalating conflict.
Previously, US President Barack Obama and German Chancellor Angela Merkel agreed the date of May 25th as a trigger for more sanctions against Russia, should the Kremlin fail to revise its position and lower aggression.
Economic recovery
The US saw a number of reports boost positive sentiment for the worlds largest economy recently. Yesterday, data on foreign trade for March revealed exports were at their second-highest level on record, with automobiles and aircraft sales leading the rally.
Previously, growing activities in the services sector were reported by the ISMs non-manufacturing PMI for April, which stood at 55.2, well ahead of expectations. Earlier, ISMs manufacturing PMI also recorded a significant gain for April to stand at 54.9, exceeding the expected 54.3, meaning a faster pace of growth in the industrial sector. Last weeks employment figures, which recorded multi-year highs, alongside increasing consumer spending cemented positive outlooks in the worlds largest economy.
The recovering economy diverts investments away from the safety of gold and other commodities, and towards the higher risk-reward of equities, such as stocks.
Assets at the SPDR Gold Trust – the largest bullion-backed exchange traded fund, remained at the lowest point since January 2009 of 782.85 tons for the third day yesterday. The fund has lost 10 tons last week. The discouraging outflow suggests investor interest in the precious metal is at a multi-year low, as the world economy recovers.
Technical view
According to Binary Tribune’s daily analysis, in case Gold June futures manage to breach the first resistance level at $1 313.8 on Monday, the contract will probably continue up to test $1 319.0. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 323.7.
If the contract manages to breach the first key support at $1 303.9, it will probably continue to slide and test $1 299.2. With this second key support broken, the movement to the downside may extend to $1 294.0.
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