Gold Ends Higher On Ukraine Developments

May 12, 2014

Chicago (May 12)  Gold futures snapped a four-day loss to end higher on Monday, with investors seeking the safe haven of the metal amid concerns over the unrest in Ukraine, where pro-Russian separatists claimed victory in a secession referendum.

Pro-Russian separatists in the Donetsk region of eastern Ukraine claimed nearly 90 percent of voters in the region voted in favor of self rule in a referendum held on Sunday. Nonetheless, the vote has been condemned as illegal by Kiev and Western governments, although Moscow appear to challenge it.

Gold for June delivery, the most actively traded contract, gained $8.20 or 0.6 percent to close at $1,295.80 an ounce on the Comex division of the New York Mercantile Exchange on Monday.

Gold for June delivery scaled an intraday high of $1,304.50 and a low of $1,277.70 an ounce.

Last Friday, gold ended a shade lower amid worries over the deteriorating situation in eastern Ukraine with pro-Russian separatists calling for a referendum to determine self-rule, brushing aside the Russian president advise of deferring the vote.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 782.85 tons on Monday from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.89 on Monday, up from its previous close of 79.87 late Friday in North American trade. The dollar scaled a high of 79.92 intraday and a low of 79.78.

The euro traded higher against the dollar at $1.3759 on Monday, as compared to its previous close of $1.3754 late Friday in North America. The euro scaled a high of $1.3775 intraday and a low of $1.3750.

In economic news, the Confederation of British Industry on Monday upgraded U.K. economic outlook as recovery continues to take hold and estimates an interest rate hike in the first quarter of 2015. The business lobby has forecast 3 percent economic growth this year, up from a prior estimate of 2.6 percent. Likewise, growth for 2015 was lifted to 2.7 percent from 2.5 percent. The CBI estimates 8.3 percent rise in business investment this year and 9.1 percent in 2015.

China's bank lending remained below expectations, while money supply growth accelerated in April, data from the People's Bank of China showed Monday. Banks lent CNY 774.7 billion worth of loans in April, compared to CNY 1.05 trillion loans provided in March. This was also below the expected level of CNY 880 billion.

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