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Gold Gains in New York as Investors Weigh Ukraine Against U.S.

Aug. 6 (Bloomberg) -- Gold rose for the first time this week in New York as investors weighed haven demand from tension over Ukraine against signs the U.S. economy is improving.

Geopolitical unrest helped gold gain 7.3 percent this year. Russian President Vladimir Putin ordered his government to respond to U.S. and European sanctions as Poland said the risk of Russia invading Ukraine has increased in the “last dozen hours or so” after Putin increased the number of troops on his country’s western border. Israel withdrew troops from the Gaza Strip on the first day of a 72-hour cease-fire.

Prices have retreated from a three-month high set July 10 amid signs the U.S. economy is strengthening. The dollar reached a five-month high versus 10 major currencies after Federal Reserve Bank of Dallas President Richard Fisher said yesterday U.S. policy makers were becoming more “hawkish” and data showed factory orders and service activity increased.

“With the Russians once again massing troops on the Ukraine border and the world watching to see if Israel/Hamas keep to the cease-fire, I doubt many people will want to short gold here,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note today. A stronger dollar curbed the appeal of precious metals, he said.

Gold for December delivery rose 0.4 percent to $1,290.10 an ounce by 7:29 a.m. on the Comex in New York. It rebounded from $1,281 on Aug. 1, the lowest since June 19. Bullion for immediate delivery added 0.1 percent to $1,289.43 in London, according to Bloomberg generic pricing.

Futures trading volume was 39 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

Fed Stimulus

Bullion ended a 12-year rally in 2013 on speculation the Fed would slow stimulus as the economy improves. Federal funds futures contracts show about a 69 percent probability the central bank will increase its benchmark to 0.5 percent or more by September 2015.

Gold “is caught between an improving U.S. economy and tension in Ukraine,” said Huang Wei, a Shanghai-based analyst at Huatai Great Wall Futures Co. “We remain cautious as the Fed maintains its path to end asset purchases.”

Silver for September delivery was 0.1 percent lower at $19.82 an ounce in New York, after falling to $19.76 yesterday, the lowest since June 18. Holdings in silver-backed exchange- traded products are at the lowest level since February, data compiled by Bloomberg show.

Platinum for October delivery lost 0.2 percent to $1,453.40 an ounce. It reached a six-week low of $1,451.10 yesterday. Palladium for September delivery fell 0.5 percent to $844.40 an ounce. It touched $837.50 yesterday, the lowest since June 27.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net Nicholas Larkin

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