Gold Surge Soars on Global Cues

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Gold climbed for a third day in London, touching the highest point in a week, as fears over Ukraine triggered haven buying and as the dollar weakened. Silver increased.

The US said Russia is probably overseeing the onslaught by separatist insurgents in Ukraine as hostilities in the country’s eastern regions spilled into previously calm regions. The fighting in Ukraine escalated after Russian President Vladimir Putin this week held talks with his Ukrainian counterpart, Petro Poroshenko, and praised the meeting as progress toward a political solution.

Bullion declined to $1,273.14 per ounce on Aug. 21, the lowest price since June 18, after minutes of the Federal Reserve’s last meet hinted that officials may raise interest rates sooner than expected. The dollar, which went up to an almost seven-month peak against 10 major currencies on Aug.26, has dropped, touching the lowest level this week today.

“Investors continued to keep a wary eye on the escalating tensions in Ukraine. Geopolitical headwinds helped increase haven demand for gold,” Liu Xu of Beijing-based Capital Futures Co. is quoted by Bloomberg as saying in a report today.

Spot gold added 0.5% to $1,289.57 by 9:52 am in London, based on Bloomberg generic pricing. It hit $1,293.50, the highest price since Aug.20. Comex December-settlement gold was up 0.5% to $1,290.20 in New York.

By this time of the day, volume of futures traded matched the 100-day average.

Gold plunged 28% last year on expectations of pared US asset purchases. Fed Chair Janet Yellen recognized growth in the labor market in an Aug. 22 talk. The Commerce Department will today publish a second estimate for GDP.

In India, gold soared following increased purchase by jewelers and retailers to satisfy seasonal demand, The Times of India reported.

Spot silver added 1.8% to $19.8050 per ounce in London. Earlier today, the metal went up as high as 2.3%.

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