Aug. 14 (Bloomberg) -- Gold futures traded little changed below a three-week high as investors assessed tension in Ukraine and the Middle East against the strength of the U.S. economy.
Ukraine opened the door to a compromise over an aid convoy from Russia and began to send its own supplies, as the Red Cross announced talks with both governments. Russian President Vladimir Putin said the country will do all it can to stop the conflict in Ukraine. Israel and Gaza Strip militants agreed to extend a truce for five days, as eight rockets fired from Gaza at Israel before and after the original 72-hour truce expired.
The dollar traded below a nine-month high against the euro after data showed Germany’s economy contracted more than economists forecast last quarter and France stagnated. The greenback has strengthened since May amid signs the U.S. economy is improving, with the Federal Reserve cutting bond buying and contemplating interest-rate increases.
“In the absence of notable physical demand or renewed safe-haven inflows, the market is set to continue its current sideways pattern,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a note. Prospects for higher interest rates “will only boost the opportunity cost of holding gold and continue hurting investor demand for the yellow metal.”
Gold for December delivery lost 0.2 percent to $1,311.50 an ounce by 7:32 a.m. on the Comex in New York. It reached $1,324.30 on Aug. 8, the highest since July 18. Bullion for immediate delivery declined 0.2 percent to $1,310.17 in London, according to Bloomberg generic pricing.
Futures trading volume was 8 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Bullion demand fell 16 percent to 963.8 metric tons in the second quarter, with global jewelry buying dropping 30 percent and bar and coin demand down 56 percent, the World Gold Council said in a report today.
Silver for September delivery added 0.2 percent to $19.875 an ounce in New York, after reaching an eight-week low of $19.705 yesterday. Platinum for October delivery was little changed at $1,470.30 an ounce. Palladium for September delivery lost 0.1 percent to $880.70 an ounce. It reached a 13-year high of $890 on July 17.
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