Gold turns higher on technical buying as tensions rise
New York (Aug 7) Gold prices rose on Thursday as safe-haven buying amid rising tensions in Iraq and Ukraine extended the previous session's rally, and analysts said the metal could gain further after having breached key technical resistance.
Bullion climbed after the New York Times reported that U.S. President Barack Obama was considering air strikes and emergency relief airdrops to help 40,000 religious minorities in Iraq, who are trapped on a mountaintop after threats by Islamic militants. A White House spokesman later would not say if air strikes were being considered.
Analysts said technical buying could further lift gold after worries about a possible escalation of the military conflict in Ukraine sent bullion prices above key resistance, including the 50-day and 100-day moving averages on Wednesday.
"That gold prices had managed to hold at the 200-day moving average, despite a couple of attempts to break the downside, could well have lured short-term players back in," said Edel Tully, precious metals strategist at UBS.
Spot gold was up 0.4 percent at $1,310.74 an ounce by 2:05 p.m. EDT (1805 GMT).
On Wednesday, gold jumped about 1.5 percent for its biggest one-day gain in more than a month, triggered by worries about an escalation of the conflict in Ukraine and by a weak undertone in global equities.
U.S. COMEX gold futures for December delivery settled up $4.30 an ounce at $1,312.50, while trading volume was about 25 percent below its 30-day average, preliminary Reuters data showed.
Bullion initially fell as U.S. equities rose after data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week. The S&P 500 equities index, however, later erased gains to trade lower.
Gold investors took heart after the European Central Bank said it held borrowing rates at record low levels as the Ukraine crisis has heightened risks to the euro zone's weak and uneven economic recovery.
Despite Wednesday's price gains, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 2.4 tonnes to 797.65 tonnes on Wednesday.
Among other precious metals, silver was down 0.4 percent at $19.92 an ounce. Platinum rose 1.4 percent to $1,473.70 an ounce, while palladium was up 0.6 percent at $852.47 an ounce.