Gold Falls on Positive US Data But Keeps and Eye on Ukraine

Gold fell in New York as investors weighed signs of an improving U.S. economy against tension over Ukraine.

The U.S. and European powers joined Ukraine in condemning what they said were incursions by Russia as the government in Kiev sought to counter an offensive by separatist rebels. U.S. President Barack Obama said Russia faces “more costs and consequences” and the European Union has called for threats of further sanctions on Russian President Vladimir Putin.

Gold added 0.4 percent this month, rebounding from a two-month low of $1,273.40 an ounce set Aug. 21, even as improving U.S. data supported the case for the Federal Reserve to raise borrowing costs sooner than forecast. Data released yesterday showed the U.S. economy expanded more than previously forecast in the second quarter. Other reports showed the outlook for home sales improved and consumer confidence climbed.

“For gold to move substantially higher, it has to see more turmoil in the Ukraine either in the way of a widening conflict, or barring that, additional sanctions being imposed,” Edward Meir, an analyst at INTL FCStone Inc. in New York, wrote in a note. Precious metals have “to grapple with a rapidly improving macro outlook out of the U.S., which carries with it the very real, and bearish, possibility that the Fed will have to move on rates sooner than it is saying.”

Gold for December delivery fell 0.3 percent to $1,286.60 by 7:29 a.m. on the Comex in New York. It reached $1,297.60 yesterday, the highest since Aug. 20. Bullion for immediate delivery lost 0.3 percent to $1,285.75 in London, according to Bloomberg generic pricing.

via Bloomberg

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