May 7 (Bloomberg) -- Gold traded near the highest price in almost three weeks in New York as investors weighed tension in Ukraine with the outlook for the U.S. economy. Palladium held below the highest level since August 2011.
The U.S. and its European allies urged Ukraine to proceed with its May 25 presidential election, rejecting Russia’s calls to postpone the vote as an offensive against separatists in the country’s east and south continued. Secretary of State John Kerry said yesterday the U.S. remains poised to impose sanctions on parts of Russia’s economy “if Russian elements continue to sabotage the democratic process” in Ukraine.
Russia is the largest supplier of palladium, which has advanced 14 percent this year. Gold has gained 9 percent in 2014, even as the Federal Reserve announced cuts to asset purchases at each of the past four meetings as the economy strengthens. Data showed yesterday the U.S. trade deficit narrowed in March as exports grew by the most in nine months.
The crisis in Ukraine “means that there will be some safe- haven demand for gold and silver, so we expect that over the short term, it will have a positive effect,” Piet-Hein Ingen Housz, global head of metals at ABN Amro Bank NV, said in a Bloomberg Television interview. “However, if the economies in the U.S. and Europe indeed do pick up, that will have a downward pressure on gold and silver in the longer term.”
Gold for June delivery added 0.1 percent to $1,310.50 an ounce by 7:32 a.m. on the Comex in New York. It reached $1,315.80 on May 5, the highest since April 15. Futures volume was about the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery rose 0.2 percent to $1,310.50 in London, according to Bloomberg generic pricing.
Gold slid 28 percent in 2013, the biggest annual drop in more than three decades, on expectations the Fed would reduce stimulus as the economy recovers. Fed Chair Janet Yellen testifies to U.S. lawmakers today and tomorrow.
Silver for July delivery was unchanged at $19.645 an ounce in New York. Platinum for July delivery fell 0.4 percent to $1,452.20 an ounce, after reaching $1,459.60 yesterday, the highest since April 15. Palladium for June delivery lost 0.4 percent to $815.40 an ounce. It reached $822 yesterday, the highest since August 2011.
More than 70,000 mine workers have been on strike since January in South Africa, the biggest platinum producer and second-biggest for palladium. Palladium-backed exchange-traded- product holdings rose 2 percent to a record 82 metric tons yesterday, data compiled by Bloomberg show.
Impala Platinum Holdings Ltd., the second-largest producer, said it would cut deliveries by as much as 60 percent in three to four months should the South African strike continue to cripple mines. It met all customer deliveries in April.
“The market may be close to another leg higher if the strike is not resolved soon,” James Steel, an analyst at HSBC Securities (USA) Inc., said in an e-mailed report yesterday. While platinum-group metals prices may weaken in the short term if workers accept a wage offer, “the medium- to longer-term bullish prospects for the PGMs remain intact,” he said.