Gold traded below a three-week high as investors weighed the prospects for renewed fighting in Gaza and simmering tension between Ukraine and Russia against the outlook for the U.S. economy and a stronger dollar.
Gold for immediate delivery traded at $1,309.12 an ounce at 9:12 a.m. in Singapore from $1,309.51 yesterday, according to Bloomberg generic pricing. The metal on Aug. 8 reached $1,322.76, the highest level since July 18, as the U.S. approved air strikes inIraq against Islamic militants.
Bullion rose 8.9 percent this year amid unrest in Ukraine, Iraq and Gaza, which spurred haven demand, and an uneven global recovery. Data yesterday showed that German investor confidence fell to the lowest since 2012, sending the euro to a nine-month low against the dollar. The government in Kiev wrangled over allowing a Russian convoy carrying aid into rebel-held areas, while Israel prepared for fresh battles in Gaza.
“Geopolitical safe-haven demand has triggered higher gold prices recently,” Yang Xi, an Hangzhou-based analyst at Yongan Futures Co., said from Hangzhou, China. “On the macroeconomic front, as the pace of recovery in major economies diverges, so will monetary policies, and that will be a driver for gold. On the physical front, demand in China remains lackluster.”
In China, the world’s largest user, daily volumes for the benchmark spot contract on the Shanghai Gold Exchange have been below the 14-month high of 29,294 kilograms reached on June 27.
Data today may show U.S. retail sales increased for a sixth month, adding to signs the world’s largest economy is improving as the Federal Reserve moves to end stimulus used to fuel growth, while contemplating interest-rate increases. The Bloomberg Dollar Index is trading near a five-month high.
Gold for December delivery traded at $1,310.10 an ounce on the Comex in New York from $1,310.60 yesterday. Holdings in the SPDR Gold Trust were unchanged for a second day yesterday after dropping last week below the level at which they ended 2013.
Silver for immediate delivery traded at $19.9463 an ounce from $19.9227 yesterday. Spot platinum fell 0.2 percent to $1,465.75 an ounce while palladium was little changed at $877.50 an ounce.
