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Gold Futures Decline From 17-Week High as Ukraine Tensions Ease

Gold futures fell from a 17-week high as demand for a haven eased after Russian President Vladimir Putin said that there’s no immediate need to send troops to Ukraine. Palladium jumped.

In his first public remarks since Russian forces increased in the Crimean peninsula in southern Ukraine, Putin reserved the right to use force to protect ethnic Russians. Gold rose as much as 2.5 percent yesterday as tensions escalated. U.S. Secretary of State John Kerry arrived in Kiev to present a financial-aid package to the interim government.

This year, gold has gained 11 percent partly amid signs of a faltering global economy. In 2013, the price plunged 28 percent, the most since 1981, as U.S. equities surged to a record. Federal Reserve Chair Janet Yellen said last week the central bank is “open to reconsidering” the pace of cuts in monetary stimulus should growth weaken.

“The situation seems to have calmed down a bit, and that’s pushing gold lower,” Phil Streible, a senior commodity broker at R.J. O’ Brien & Associates in Chicago, said in a telephone interview. “People will continue to monitor data out of the U.S. to gauge the strength of the economy.”

Gold futures for April delivery fell 0.9 percent to settle at $1,337.90 an ounce at 1:47 p.m. on the Comex in New York. Yesterday, the price reached $1,355, the highest for a most-active contract since Oct. 30.

$1,400 Option

The most-traded gold option on the Comex yesterday was a call giving owners the right to buy at $1,400 by April, with an estimated 4,547 lots changing hands. That’s almost double the amount of the next most-active option and compares with an average volume of 427 in the past month.

“The current round of gains may retrace should the tension in the Ukraine ease,” Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group, said in a note before prices dropped today.

The Fed cut monthly bond purchases at both its December and January meetings by $10 billion, leaving purchases at $65 billion. Gold surged 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system to bolster the economy growth. The price rose to a record $1,923.70 in September 2011.

Silver futures for May delivery fell 1.2 percent to $21.222 an ounce on the Comex.

On the New York Mercantile Exchange, platinum futures for April delivery rose 0.2 percent to $1,464.10 an ounce. Earlier, the price reached $1,467.60, the highest since Jan. 23. The metal has climbed 6.6 percent this year.

The union leading a strike in South Africa that has paralyzed the world’s three largest platinum producers eased its pay demands as the walkout approached the end of the sixth week.

Palladium futures for June delivery advanced 1.8 percent to $763.80 an ounce. Earlier, the price reached $765.70, the highest since Aug. 16. Russia is the top source of the metal.

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

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