Gold price well bid above $1,300 as Ukraine boosts safe-haven appeal
Singapore: Gold held on to overnight gains above USD 1,300 on Thursday, trading near its highest in more than a week as fears of Russian military action against Ukraine and retaliation by Moscow over Western sanctions burnished gold`s appeal as a safe haven.
Russia will ban all imports of food from the United States and all fruit and vegetables from Europe, the state news agency reported on Wednesday, even as NATO said Russia had massed around 20,000 combat-ready troops on Ukraine`s border.
The troop build-up sapped risk appetite, sending equities lower and global bond prices higher.
"We think that for gold prices to really move higher, the complex will need to see current political tensions translate into economic dislocations that could conceivably impact the global economy," said INTL FCStone analyst Edward Meir.
"Judging the recent Russian actions, we very well may be heading towards that direction at a much more rapid clip than was the case several weeks ago."
Spot gold was little changed at USD 1,306.20 an ounce by 0624 GMT, after gaining 1.4 percent on Wednesday.
The metal hit USD 1,309.60 in the previous session - its highest since July 29. U.S. gold was also steady at USD 1,307.50 after rising 1.8 percent in the previous session.
Gold is seen as an alternative investment to riskier assets such as equities, especially during times of economic and geopolitical uncertainties. It has gained more than 8 percent this year on geopolitical tensions.
Investor sentiment in bullion still seemed fragile, however, on persistent worries over possible tightening of monetary policy in the United States.
SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, saw its holdings fall 2.4 tonnes to 797.65 tonnes on Wednesday.
Markets were eyeing data due on Thursday on U.S. jobless claims to gauge the strength of the world`s largest economy. They were also awaiting a statement by the European Central Bank regarding its monetary policy.
In the physical markets, buying slowed on Thursday after prices rose above USD 1,300 an ounce. Premiums in top buyer China dropped to about USD 1 an ounce from USD 2-USD 3 in the previous session.
Demand had already been sluggish due to the seasonally quiet summer period and on expectations of a further drop in prices.