Gold Recovers From Five Week Low

Gold traded above a five-week low in New York as investors weighed the crisis over Ukraine against the outlook for higher U.S. interest rates.

Bullion futures dropped 3.1 percent last week as U.S. Federal Reserve Chair Janet Yellen said the central bank’s debt-buying program may end this year. Fed Bank of Atlanta President Dennis Lockhart said yesterday he expects interest rate increases in the second half of next year.

Gold reached a six-month high on March 17 as a standoff between Russia and the West escalated. U.S. President Barack Obama warned Russian President Vladimir Putin yesterday that Russia would face more sanctions if it moved further into eastern Ukraine after its annexation of Crimea.

“The comments we’ve seen from Yellen has maybe got a bit of market jitters going and prompted some profit-taking,” James Moore, an analyst at FastMarkets Ltd. in London, said today by phone. “There’s still buying interest for gold. Ukraine created some safe-haven demand and has got the potential to increase in the coming sessions.”

Gold for June delivery added 0.2 percent to $1,314.40 an ounce by 7:50 a.m. on the Comex in New York. It reached $1,305.90 yesterday, the lowest since Feb. 14. Futures volume was 6 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery rose 0.2 percent to $1,314.25 in London.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza