Gold Draws Safe-Haven Bid In Electronic Trading After Crimean Vote
Shanghai (Mar 17) U.S. gold futures jumped to their highest level in more than half a year not long after electronic trading opened Sunday night, continuing to draw a safe-haven bid after news reports saying Crimeans voted to leave Ukraine and join Russia.
The vote drew an angry rebuke from the Ukrainian government, and Western leaders said they would not recognize the result, claiming intimidation as a result of the Russian military presence in Crimea.
Yet another supportive influence, traders said, was news that North Korea fired 10 rockets toward the Sea of Japan.
Around 7 p.m. EDT, gold for April delivery was $10.20, or 0.7%, higher to $1,389.20 per ounce on the Comex division of the New York Mercantile Exchange. The contract traded as high as $1,392.60 an ounce, its most muscular level since Sept. 4, the last time it was above $1,400. May silver was up 17.2 cents, or 0.8%, to $21.585 an ounce.
The vote in Crimea went largely as the market was expecting, as prices were ticking higher in electronic trading after the pit close late Friday, said Sean Lusk, director of commercial hedging with Walsh Trading.
“Going forward from here, the market wants to see what kind of sanctions will be levied against Russia,” continued Lusk, who was among the North American traders watching the market on a Sunday night after the weekend news.
In particular, market participants will be trying to gauge what impact the geopolitical tensions and any sanctions could have on the global economy, he said. The market also will be watching to see what steps the Russian military takes next in Crimea.
“Traders still do not want to be short,” Lusk said, referring to speculative trades in which traders sell on the expectation of weaker prices.
Gold is well above the 200-day moving average, a reflection of the safe-haven demand in recent weeks, Lusk said. For the April futures, this stands at $1,303.90 an ounce.
“There (are) enough geopolitical concerns to worry about and gold is liquid -- portable if needed and convertible to any currency,” said George Gero, vice president and precious-metals strategist with RBC Capital Global Markets. Gero also cited safe-haven demand as the market opened for a new week, pointing to not only Crimea but the most recent news about North Korea.
Lusk cautioned that profit-taking from short-term speculators is possible, however, should gold hit the major psychological level of $1,400 an ounce, particularly with end of the month and end of the quarter a little more than two weeks away. He pointed out that the precious metal has already gained some 15% for the year.