Gold News

Gold Prices Flat Above $1290 as Putin Visits Crimea, Eurozone Stocks Drop from 6-Year High

GOLD PRICES held flat above $1290 per ounce Friday morning in London, heading for the fifth weekly drop in eight as fresh tensions grew over Russian involvement in Ukraine.
 
Trading 0.7% below last Friday's finish, spot gold prices have so far averaged $1296 per ounce in 2014.
 
West European stock markets today slipped from new 6-year highs, hit after Thursday's central bank comments on QE, while energy prices ticked 0.5% higher as Russian president Putin marked WWII Victory Day by visiting the former Ukraine region of Crimea.
 
Ignoring Putin's mid-week call to wait, pro-Russian separatists in Donetsk will hold a referendum this Sunday on also leaving Ukraine.
 
Tanks and other armoured vehicles with Ukraine flags were seen in Mariupol, where gunfire was reported Friday morning.
 
The Euro slipped another 1 cent, doubling its drop from Thursday's 2.5-year high near $1.40 after ECB chief Draghi suggested the central bank will likely start some form of QE money creation in June.
 
Gold prices in China meantime ended today higher than London quotes for the fifth session in seven, closing on the Shanghai Gold Exchange's most active contract equal to a premium of $2.70 per ounce – the highest level since February on data compiled by BullionVault.
 
"The near-term outlook for gold prices remains neutral," says Canada-based bank Scotia Mocatta in its daily analysis, "so long as it continues to close above the all-important support level of the 100-day moving average" – now at $1287 per ounce.
 
"Watch the channel support at $1286/83 levels," says another technical analysis.
 
"With a lack of any particular news on the economic front," says Jonathan Butler at Japanese conglomerate Mitsubishi, "and with the tensions in Ukraine having declined from the elevated levels we've seen recently, the market is searching for direction, stuck in a range either side of $1300."
 
But Ukraine and Russia tensions "have not eased much," counters Robin Bhar at London market-maker, French bank Societe Generale, telling the Wall Street Journal that bearish traders – anxious that further escalation could boost prices – might look to cover their short positions today.
 
"People don't like to be short ahead of the weekend."
 
Looking at Thursday's Euro news, UBS economists now expect a rate-cut in June – "a negative read-through for gold," according to the Swiss bank's precious metals analysts, "principally through the FX impact."
 
Falling Eurozone interest rates "should weaken" the Euro against the Dollar, says the note, "encourag[ing] weaker sentiment towards the yellow metal."

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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