Gold Reaches Three-Week High as Iraq Unrest Boosts DemandDebarati Roy and Whitney McFerron
Gold capped the longest rally in almost four months as intensifying unrest from Iraq to Ukraine increased demand for the precious metal as a haven.
Bullion has climbed 6.1 percent this year partly because of tension in Ukraine, which said today that natural gas supplies had been cut off by Russia amid worsening relations between the two countries. Iraq’s army killed more than 279 fighters from the Islamic State in Iraq and the Levant and destroyed 50 of the group’s vehicles within 24 hours, military spokesman Qassim Ata said yesterday.
“Some people see the need for gold, as there has been a breakdown of international agreement in Ukraine and as the situation in Iraq worsened,” Jeffrey Christian, the managing director at New York-based CPM Group Inc., said in a telephone interview.
Gold futures for August delivery increased 0.1 percent to settle at $1,275.30 an ounce at 1:46 p.m. on the Comex in New York. The metal touched $1,285.10, the highest for a most-active contract since May 27, and has gained for six straight sessions, the longest rally since Feb. 18.
Trading was 33 percent below the average for the past 100 days for this time, according to data compiled by Bloomberg.
Iraq “is having a big effect on oil, and gold is seeing fresh buying and short covering on the back of this,” David Govett, the head of precious metals at Marex Spectron Group in London, said in an e-mailed note. “While the uncertainty and unrest remains, one certainly doesn’t want to be short.”
Gold has climbed this year after declining the most in three decades in 2013 as equities surged and on concern that the Federal Reserve would scale back monetary stimulus as the U.S. economy improved. Policy makers have made four straight $10 billion cuts.
The metal gained 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent. The Federal Open Market Committee next meets on June 17-18.
Silver futures for July delivery increased 0.3 percent to $19.715 an ounce. The price touched $19.875, the highest since May 14.
On the New York Mercantile Exchange, palladium futures for September delivery fell 0.4 percent to $809.35. Platinum futures for July delivery advanced 0.3 percent to $1,439.10 an ounce.
Palladium has increased 13 percent this year and platinum gained 4.8 percent as a 20-week strike in South Africa crippled output. Last week, mining companies and union officials agreed on a wage pact to present to workers in a bid to end the dispute.
The nation is the world’s largest platinum producer and second-biggest for palladium.