Gold Slides to Three-Month Low on Easing Ukraine Tension

Gold fell to a three-month low on signs of calming tensions in Eastern Europe, damping demand for the metal as a haven asset.

Ukrainian President Petro Poroshenko said Russia has withdrawn more than two-thirds of its troops from his country, after a Sept. 5 truce signaled an end to the conflict that has killed at least 3,000 people. Gold prices are up 3.6 percent this year, paring gains of as much as 16 percent after violence also eased in the Middle East.

Bullion is poised for its first quarterly retreat in 2014. Gains for the U.S. economy have opened the door for the Federal Reserve to raise interest rates, cutting demand for gold as a hedge against inflation. Money mangers cut their bullish wagers on the metal for three straight weeks, while open interest in New York futures and options is near the lowest in five years.

“Peace is breaking out all over the place,” Peter Thomas, a senior vice president at Zaner Group in Chicago, said in a telephone interview. “That has really caused the market to cool. We’re really seeing the potential for an interest-rate hike for the first time in many years, and that can put a lot of pressure on” gold, he said.

Gold futures for December delivery fell 0.3 percent to $1,245.30 an ounce at 1:38 p.m. on the Comex in New York, after touching $1,244.50, the lowest since June 5.

The metal erased gains of as much as 0.8 percent after U.S. equities rebounded, curbing demand for gold as an alternative asset, Phil Streible, a senior market strategist at RJO Futures, said in a telephone interview from Chicago.

Silver futures for December delivery rose less than 0.1 percent to $18.926 an ounce on the Comex.

On the New York Mercantile Exchange, platinum futures for October delivery slid 0.3 percent to $1,381 an ounce. Palladium futures for delivery in December fell 1.3 percent to $849.05 an ounce.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE