Gold Has Risen 8.4% This Year on Safe Haven Demand

Gold rose for the first time in three days in New York as investors weighed the standoff over Ukraine against a stronger dollar. Palladium was near a 13-year high.

Gold rose 8.4 percent this year partly as unrest helped fuel demand. Ukrainian government forces took control of one of four districts in the pro-Russian separatist stronghold of Luhansk, as the Red Cross said it’s working toward agreement on details of a safe-passage plan for a Russian aid convoy. Talks on a halt to the fighting stalled yesterday. Israel and Palestinian militants agreed to extend their five-day truce for 24 hours in another attempt to reach a long-term accord.

The dollar was near a nine-month high versus the euro amid signs of economic recovery that support the case for the Federal Reserve to raise interest rates. The Fed releases minutes of its July 29-30 policy meeting tomorrow and Chair Janet Yellen is due to deliver a speech on Aug. 22 at an annual symposium in Jackson Hole, Wyoming. Prospects for higher borrowing costs may support the greenback, and gold usually moves inversely to the currency.

“With geopolitical headwinds not escalating, with the dollar looking strong and with physical buying lacking, we feel that gold will face strong headwinds in sustaining gains in the near term,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today. “Later this week, the focus will turn toward the release of the FOMC minutes and Fed Chair Yellen’s testimony.”

Gold for December delivery added 0.3 percent to $1,302.80 an ounce by 7:37 a.m. on the Comex in New York. It reached $1,293 on Aug. 15, the lowest since Aug. 6. Bullion for immediate delivery rose 0.3 percent to $1,301.98 in London, according to Bloomberg generic pricing.

via Bloomberg

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