Gold News

Gold Prices Surge, Reverse Sharp Drop on Russia-Ukraine News & Comex Options Expiry

GOLD PRICES surged 1.7% in 12 minutes Thursday afternoon in London, reversing all the week's previous 2.0% drop on frantic trade in US Comex derivatives as news spread of Russian troops mobilizing near the Ukraine border.
 
European stock markets sank, turning an earlier 1% rise in Germany's Dax into a 1% drop for the day, as rumors hit trading-rooms that Russian president Putin had also called an emergency press conference.
 
The US State Department overnight dismissed Russian foreign minister Lavrov's claim that it is behind the unrest in eastern Ukraine as "ludicrous".
 
Thursday also saw the expiry of US Comex May options in gold, with strong selling interest at $1300 and below. 
 
Comex gold futures and options trading via the Globex platform had earlier spiked as prices sank to 12-week lows for Euro and Sterling investors, and fell hard against all major currencies.
 
Sliding 1.1% inside an hour, Dollar gold prices were headed for their worst AM to PM London Fix drop of 2014 so far. But with sellers taking profits on Comex options, gold then rebounded from $1269 per ounce, holding steady in the mid-70s before jumping almost $30 above that level as the Russia-Ukraine rumors broke.
 
Silver extended the drop and bounce in gold prices, surging almost $1 per ounce from its first sub-$19 print since December 2013.
 
"Gold received some support [Weds] from the escalation of the crisis in Ukraine," reckons Lv Jie, analyst in Hangzhou, China for Cinda Futures Co., "[plus] US home sales data" which were much weaker than forecast.
 
"[But] we still think the US is on the road to economic recovery, which will pressure gold lower in the longer term."
 
New US data on Thursday showed orders for durable goods rising well ahead of analyst forecasts in March, but jobless benefits claims for last week were also higher than expected.
 
Next week will still find the US Federal Reserve "highly likely to slow its [QE] asset purchases by another $10bn," says the Financial Times, pointing to strong retail sales, industrial output and monthly jobs data.
 
The Eurozone's central bank, in contrast, will move the other way and " increase meaningfully the degree of monetary accommodation" should inflation across the 18-nation currency union slip further, ECB chief Mario Draghi said in a speech in Amsterdam today.
 
The Euro fell sharply on today's US durable goods release, dropping back towards 2-week lows before rising to unchanged on the day at $1.3820.
 
Crude oil rose 0.7%, and US Treasury bond prices also reversed earlier falls.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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