Gold Rises as Ukraine and Iraq on the Radar

Gold futures traded little changed below a three-week high as investors assessed tension in Ukraine and the Middle East against the strength of the U.S. economy.

Ukraine opened the door to a compromise over an aid convoy from Russia and began to send its own supplies, as the Red Cross announced talks with both governments. Russian President Vladimir Putin said the country will do all it can to stop the conflict in Ukraine. Israel and Gaza Strip militants agreed to extend a truce for five days, as eight rockets fired from Gaza at Israel before and after the original 72-hour truce expired.

The dollar traded below a nine-month high against the euro after data showed Germany’s economy contracted more than economists forecast last quarter and France stagnated. The greenback has strengthened since May amid signs the U.S. economy is improving, with the Federal Reserve cutting bond buying and contemplating interest-rate increases.

“In the absence of notable physical demand or renewed safe-haven inflows, the market is set to continue its current sideways pattern,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a note. Prospects for higher interest rates “will only boost the opportunity cost of holding gold and continue hurting investor demand for the yellow metal.”

Gold for December delivery lost 0.2 percent to $1,311.50 an ounce by 7:32 a.m. on the Comex in New York. It reached $1,324.30 on Aug. 8, the highest since July 18. Bullion for immediate delivery declined 0.2 percent to $1,310.17 in London, according to Bloomberg generic pricing.

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