Gold resumed its rise for a third straight session on Thursday as the escalating tensions in Ukraine and drop in dollar spurred demand on the metal.
Just one day after Russian and Ukrainian leaders met in Minsk to find a way to ease the ongoing fights, military leaders in Ukraine charged that Russia was deepening its intervention in Ukrainian territory by sending new troops to the southeast border.
“German Chancellor Angela Merkel has demanded an explanation from Russia`s President Vladimir Putin amid reports that Russian troops have launched an incursion into south-east Ukraine,” the BBC said.
The U.S. dollar retreated for a second consecutive session versus a basket of major currencies, after hitting near one-year high on Wednesday. The dollar index slipped to 82.40 after touching a peak of 82.75.
The dollar will probably face some downside correction as it became overbought, according to the momentum indicators.
Still, there are speculations the Fed may raise interest rates sooner than predicted amid the recent progress in economic data, which may weigh on gold prices.
On the other hand, the European Central Bank has referred it may use any tool, including QE measures, if inflation outlook worsened.
Today, Germany will released its CPI data for August, where tomorrow eyes will track euro-area inflation data.
Perhaps the rally in equities is one of the key factors preventing stronger gain by gold, as
U.S. shares jumped on Tuesday, pushing the S&P index to close above 2,000 for the first time.
Gold is currently trading around $1287.66 after hitting a high of $1289.43 and a low of $1282.14.
The prices are still below the physiological level of $1300, which pushed the price down last week.
Crude Oil for October’s delivery dropped for a second session to trade around $93.62 after hitting a bottom of $93.51.