May 9 (Bloomberg) -- Gold rose in New York, narrowing a weekly drop, as investors weighed the Ukraine standoff with the outlook for monetary stimulus.
Ukraine’s leaders said they’re ready for a dialogue with peaceful representatives of eastern regions, where pro-Russian separatists said they’ll push ahead with a vote on autonomy after Russian President Vladimir Putin called for a delay. The European Union is ready to expand sanctions to some Russian companies, two officials said.
Gold slid 28 percent last year on expectations that the Federal Reserve would pare its bond-buying program. Fed Chair Janet Yellen said this week that strength in the economy made measured reductions in asset purchases appropriate, even as stimulus is still needed. The dollar rebounded from the lowest level since 2011 against the euro after European Central Bank President Mario Draghi yesterday said the bank may ease in June.
“The only supportive factor for gold is short-term speculative interest that could emerge from the prolonged Ukrainian crisis,” Abhishek Chinchalkar, an analyst at Mumbai- based AnandRathi Commodities Ltd., wrote in a report today. Draghi’s comments “raised speculation that further monetary accommodation could be forthcoming next month. If the dollar starts to rally against the euro in the coming days, the weakness in gold could resume.”
Gold for June delivery gained 0.5 percent to $1,293.60 an ounce by 7:40 a.m. on the Comex in New York. It’s down 0.7 percent this week after reaching $1,284.80 yesterday, the lowest since May 2. Futures volume was 37 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery rose 0.4 percent to $1,293.88 in London, according to Bloomberg generic pricing.
The Fed announced cuts to asset purchases at each of the past four meetings as it unwinds the program used to support the economy. It has kept the target for overnight lending between banks in a range of zero to 0.25 percent since 2008.
Putin presided over nationwide army drills yesterday, a day after he softened his tone by promising to withdraw troops from the border, voicing support for Ukraine’s presidential election, and saying it’s not the right time for a referendum on secession in the Donetsk and Luhansk regions. He arrived in the Crimea region he annexed in March from Ukraine.
Silver for July delivery rose 0.4 percent to $19.2574 an ounce in New York. Platinum for July delivery lost 0.2 percent to $1,435 an ounce, after reaching a three-week high of $1,459.60 on May 6. Palladium for June delivery fell 0.1 percent to $803.30 an ounce. It touched $822 three days ago, the highest since August 2011.