Gold traded below a four-month high in New York as investors weighed the crisis in Ukraine and the outlook for the U.S. economy before employment data due tomorrow. Palladium was near the highest price since April.
Russian President Vladimir Putin said this week that while he sees no immediate need to use force in southeastern Ukraine, he’s reserving the right for military action to protect ethnic Russians in the region from extremists. Western nations including the U.S. are threatening Russia with sanctions over its military intervention in Crimea while pursuing diplomacy in an effort to defuse the crisis.
Gold rallied 11 percent this year as concern that the U.S. recovery may be faltering and recent turmoil in Ukraine boosted demand for a haven. Bullion rebounded from the biggest annual drop since 1981 even as the Federal Reserve scaled back stimulus. Most U.S. regions grew last month even as harsh winter weather impeded hiring, the Fed’s Beige Book survey showed yesterday. The Labor Department will release jobs data tomorrow.
“If no fresh Ukrainian concerns emerge, gold prices could come under a modest bout of profit-taking,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report. “As long as the Ukrainian uncertainty does not ease completely, we do not see a sharp downside in gold. We expect gold to be very sensitive to developments in Ukraine” and to tomorrow’s U.S. payrolls data, he said.
Gold for April delivery fell 0.4 percent to $1,335.30 an ounce by 7:56 a.m. on the Comex in New York. It reached $1,355 on March 3, the highest since Oct. 30. Futures trading volume was 22 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery lost 0.1 percent to $1,335.01 in London.
European Union leaders will consider repercussions for Russia at an emergency meeting today on the Ukraine crisis, after Russia’s foreign minister fended off a U.S. effort to ease tensions in the Crimean peninsula.
Fed Chair Janet Yellen said last week the central bank is “open to reconsidering” the pace of stimulus cutbacks should the economy weaken. The Fed, which next meets March 18-19, announced a $10 billion reduction to bond buying at each of its past two meetings, leaving purchases at $65 billion.
“While the situation between Russia and Ukraine has improved, the uncertainty of it is still expected to lift demand for a safe haven,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage. “On the downside, the pace of tapering isn’t expected to change unless U.S. economic data turns really bad.”
Silver for May delivery fell 0.3 percent to $21.20 an ounce. Platinum for April delivery added 0.8 percent to $1,480.80 an ounce, after reaching $1,489 yesterday, the highest since Sept. 9. Palladium for June delivery rose 0.9 percent to $780.05 an ounce. It touched $783 yesterday, the highest since April 1, and advanced 6.4 percent since Feb. 26.
Palladium advanced this week on concern any sanctions on Russia could curb supplies of the metal. Russia accounted for about 40 percent of palladium mine supply last year and South Africa 37 percent, London-based Johnson Matthey Plc estimates.
Talks to end a strike over pay at the world’s largest platinum producers collapsed as South Africa’s state mediator said employers and the main union remained far apart after six weeks of negotiations. More than 70,000 members of the Association of Mineworkers and Construction Union have been on strike since Jan. 23. Striking miners are marching on government offices in Pretoria today.