May 27 (Bloomberg) -- Gold fell to a two-week low in New York as investors assessed whether the election of Ukraine’s president will ease tension with Russia, reducing the metal’s appeal as a haven.
Ukraine’s President-elect Petro Poroshenko vowed to step up operations to rein in separatists in the east of the country as fighting continued after the weekend election. His victory has relieved the immediate pressure on the U.S. and the European Union to impose tougher sanctions against Russia. Gold rose 6.7 percent this year, partly as the tensions spurred haven demand.
Prices slid 28 percent last year on expectations the U.S. Federal Reserve would ease stimulus. Minutes released this month of the central bank’s April meeting showed policy makers said that continued stimulus to push unemployment lower doesn’t risk sparking an undesirable jump in inflation. The dollar rose as much as 2.7 percent versus the euro since May 8. Gold priced in dollars becomes more expensive for holders of other currencies when the greenback strengthens.
“There’s no panic” over Ukraine, Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA, a Geneva- based refiner, said today by phone. “The strengthening dollar” has also curbed demand, he said.
Gold for August delivery fell 0.7 percent to $1,282.80 an ounce by 7:33 a.m. on the Comex in New York. It reached $1,282, the lowest since May 12. U.S. markets were closed yesterday for the Memorial Day holiday and transactions will be booked today for settlement purposes.
Futures trading volumes were double the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Bullion for immediate delivery slid 0.8 percent to $1,282.78 in London, according to Bloomberg generic pricing.
“Although the rhetoric between Ukraine and Russia is friendlier in terms of the press releases, the action on the ground suggests that this crisis still has the potential to flare up again down the road,” Edward Meir, an analyst at INTL FCStone in New York, wrote in a report e-mailed today. “We continue to maintain a relatively constructive view on the gold market, although we are less sanguine about its prospects going into the second half of the year.”
Silver for July delivery fell 0.9 percent to $19.25 an ounce in New York. Platinum for July delivery was little changed at $1,472.40 an ounce. Palladium for September delivery was little changed at $832.10 an ounce. It climbed to $839.55 on May 22, the highest since August 2011, and is heading for a fourth month of gains in the longest such rally since January 2011.
Holdings in platinum- and palladium-backed exchange-traded products reached records last week, data compiled by Bloomberg show.
South Africa is the biggest miner of platinum and the second-largest for palladium. The three biggest platinum producers planned more talks with a labor court judge mediating the companies and the main union in the country to resolve a four-month strike over pay. The companies want to end the walkout by more than 70,000 miners that they say has cost them 19.8 billion rand ($1.9 billion) in revenue.