Gold gained $2.00 to trade at 1307.80 but continues to move between small gains and losses as the world situation simmers at the boiling point. There were mass murders in Bagdad yesterday as the US pulls embassy personnel and President Barak sends military to Iraq. Russia is photographed firing rockets into the Ukraine. Fighting between Ukrainian forces and rebels increased demand for the precious metal as an alternative investment. The U.S. said satellite photos show that Russian forces shelled across the border into Ukraine as Europe considers more sanctions. International pressure mounted on Israel to end its three-week offensive in the Hamas-controlled Gaza Strip.
Gold slipped on Monday due to a stronger dollar but was supported near $1,300 an ounce as its safe-haven appeal rose due to heightened tensions between the West and Russia, and violence in the Middle East. Trading during Asian hours was thin as investors were eyeing the Federal Reserve’s policy meet and major US data releases later in the week to gauge the strength of the economy and the outlook for the central bank’s monetary policy.
Bullion rebounded 8.7 percent this year after halting a 12-year rally in 2013 partly as unrest in Ukraine and the Middle East boosted haven demand. Holdings in bullion-backed exchange-traded products have shrunk 1.8 percent this year after a record 33 percent contraction in 2013 on expectations the Fed will reduce stimulus. The central bank cut asset purchases for a fifth consecutive time at its June meeting.
The U.S. will impose more sanctions on Russia after the European Union decides on its actions, President Barack Obama’s deputy national security adviser said today. International pressure mounted on Israel to end its three-week offensive in the Hamas-controlled Gaza Strip. Tension in the Middle East and Ukraine helped boost gold 8.6 percent this year.
Money managers increased their net-long position by 3.1 percent in the week through July 22, U.S. government data show. Two days later, prices dropped to a five-week low amid declining demand. Purchases by China, the world’s biggest user, fell 19 percent in the first six months of the year.
Other precious metals are diverging, Silver is trading at 20.627 while Platinum eased by $2.45 to trade at 1489.75. Industrial and base metals are trading mixed but mostly flat as the US dollar continues to climb. The stronger US dollar is weighing on copper which is trading at 3.242 down by 1 pip. Yesterday copper climbed for the first time in three days on speculation that an increase in auto sales globally will boost demand. Copper stockpiles tracked the LME have plunged 59 percent this year to 150,900 tons. South African metalworkers will return to work today after labor groups agreed to a three-year wage deal, ending a four-week walkout that threatened growth in the continent’s second-biggest economy.