Gold Falls Most in Two Weeks as Putin Comments Sap Haven Demand

Gold futures fell the most in two weeks as some signs of easing tensions in Ukraine diminished demand for the precious metal as a haven amid an equity rally.

Russian President Vladimir Putin said he isn’t seeking to split up Ukraine. Concern that a dispute over Crimea would further escalate sent gold yesterday to a six-month high. Data today showing muted U.S. inflation and a stabilizing housing market fueled speculation that the Federal Reserve will further pare monetary stimulus this week. The MSCI All-Country World Index of equities rose as much as 0.8 percent.

“The Ukraine premium is fading,” Phil Streible, a senior commodity broker at R.J. O’ Brien & Associates in Chicago, said in a telephone interview. “The Fed meeting is also putting pressure” on prices.

Gold futures for April delivery slid 1 percent to settle at $1,359 an ounce at 1:37 p.m. on the Comex in New York, the biggest drop for a most-active contract since Feb. 26. Yesterday, the price reached $1,392.60, the highest since Sept. 9, before closing down 0.4 percent.

This year, gold has advanced 13 percent as turmoil in Ukraine and signs of slowing economic growth increased demand for haven assets. Prices rebounded from the biggest annual slump since 1981 even as the Fed started to scale back asset purchases, known as quantitative easing. Data released yesterday showed U.S. industrial output rose in February by the most in six months. The Fed begins a two-day meeting today.

Continue Tapering

“We expect the Fed to continue tapering its quantitative easing as the year progresses, which would put a cap on gold prices,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report.

The metal jumped 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system and lowered interest rates to a record to boost the economy.

The central bank, which cut monthly bond buying by $10 billion at the prior two meetings, will trim purchases by another $10 billion to $55 billion, and continue on that pace at every meeting before announcing an end to the program at its Oct. 28-29 gathering, according to a Bloomberg survey.

Silver futures for May delivery dropped 1.9 percent to $20.862 an ounce on the Comex.

On the New York Mercantile Exchange, platinum futures for April delivery fell 0.5 percent to $1,461.70 an ounce.

Palladium futures for June delivery dropped 0.6 percent to $771.40 an ounce. On March 14, the price reached $788.45, the highest in a year. Russia is the world’s biggest 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 editors responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net Joe Richter

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