Gold set for longest weekly rally since 2011 on Ukraine tension

by **Cals** Fri 14 Mar 2014, 14:02

Business & Markets 2014

Written by Bloomberg

Friday, 14 March 2014 13:30

(Mar 14): Gold climbed to the highest level in six months as escalating tension in Ukraine, before a vote in Crimea on breaking away to join Russia, and concern that China’s growth is faltering boosted demand for a store of value.

Bullion for immediate delivery rose as much as 0.5 percent to $1,376.64 an ounce, the highest level since Sept. 10, and was at $1,371.50 at 11:24 a.m. in Singapore, up for a fourth day. The metal is heading for a sixth weekly increase, the longest run since August 2011, as assets in the largest exchange-traded product expanded to the highest level this year.

Gold advanced 14 percent this year on demand for a haven as turmoil in Ukraine hurt emerging-market assets already weakened by cuts to U.S. stimulus, while growth slowed in China, the largest consumer. Data this week on China’s retail sales and industrial output missed estimates, while Crimea prepared for the March 16 vote. President Barack Obama and Chancellor Angela Merkel have warned the ballot has no international legitimacy.

“Gold is buoyed by what’s happening in Ukraine and increasing worries about a slowdown in China’s economy,” said Ethan Wai, a research analyst at Wing Fung Financial Group, a Hong Kong-based gold trader and refiner. “The pullback in equities and a weaker dollar are supportive.”

The MSCI All-Country World Index of equities retreated 1.6 percent this year on concern China’s growth is faltering, with at least four investment banks cutting their forecasts for the world’s second-largest economy. The Bloomberg Dollar Index, which tracks the greenback against 10 currencies, is 0.4 percent lower this year,

Fed Meeting

Bullion’s 14-day relative strength index was at 70, signaling to some who study technical charts that prices may be set to decline. Holdings in the SPDR Gold Trust increased to 813.3 metric tons yesterday, the most since Dec. 20.

The metal rebounded this year even as the U.S. Federal Reserve, which next meets March 18-19, announced reductions to bond buying at each of its past two meetings. Data yesterday showed sales at U.S. retailers rose in February for the first time in three months, buoying prospects for a recovery.

Gold for April delivery climbed as much as 0.3 percent to $1,377 an ounce on the Comex in New York, the highest intraday level for a most-active contract since Sept. 10. It traded little changed at $1,371.90, after rising for four days.

Silver for immediate delivery added 0.3 percent to $21.2354 an ounce, poised to snap two weeks of losses. Platinum rose 0.2 percent to $1,479.13 an ounce, while palladium increased 0.2 percent $778.56 an ounce. Both metals are still heading for the first weekly declines in six weeks.