Gold Jumps on Soaring Buy Due to Supply Decline

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Gold Jumps on Soaring Buy Due to Supply Decline

Gold ascended the most in three weeks in New York on bets prices approaching a two-month low will spur physical buying as investors assessed hostilities over Ukraine and the Middle East.

Russian President Vladimir Putin is scheduled to hold talks with his Ukrainian counterpart, Petro Poroshenko on Tuesday, as Ukraine reported yesterday an armored convoy including 10 military tanks crossed from Russia as Moscow announced plans to dispatch a convoy with humanitarian aid into rebel-controlled Ukrainian territory.

Gold tumbled to a two-month low of $1,273.40 per ounce on Aug. 21, on speculations the Federal Reserve may increase interest rates sooner than expected. Fed Chair Janet Yellen suggested while speaking at Jackson Hole, Wyoming the next day that the timing for rate hikes might be pulled brought forward, with US policy makers already trimming bond purchases.

“Gold may be picking up a little bit of bargain-hunting interest. Ukraine and the Middle East “are helping keep gold underpinned,”James Moore of London-based FastMarkets told Bloomberg by phone.

December-settlement Gold ascended 0.7% to $1,287.70 as 7:26 am on the Comex in New York. Prices soared as high as 1%, the biggest intraday gain since Aug. 6. Spot bullion added 0.8% to $1,287.13 in London.

The volume of futures changing hands was 9.7% higher than the average for the past 100 days at this time of the day.

Several nations including Belarus, Ecuador and Mexico cut their gold reserves in July, while Russia and Kazakhstan added them.

Silver for December settlement increased 0.8% to $19.58 per ounce in New York. October-delivery platinum advanced 0.4% to $1,423.80 per ounce, after hitting $1,413.50, the lowest since May 1.

“We are seeing some physical demand but it’s not enough to make the market higher. I think the U.S. dollar is a bit too strong,” Yuichi Ikemizu of Standard Bank in Japan is quoted by Reuters as saying.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com