Gold prices are higher as renewed tensions in Eastern Europe and mixed US economic data buoy investor interest.
The most actively traded contract, for June delivery, on Wednesday settled up $US3.50, or 0.3 per cent, at $US1,284.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold prices have swung between gains and losses in recent weeks, as some investors focused on the crisis in Ukraine while others track shifting expectations for US economic growth. Gold is widely considered as haven from economic and political instability, but interest in such investments can wane when traders’ outlook brightens.
On Wednesday, gold drew support from escalating tensions between Russia and Ukraine, after Russian Foreign minister Sergei Lavrov warned that any attack on Russians in Ukraine will be perceived as an attack against Russia.
The comments come more than a month after Russia annexed Ukraine’s Crimea region.
Gold prices also drew support from weaker US new-home sales data, which showed sales of newly built homes fell 14.5 per cent in March from February.
Still, gold’s gains were limited as a different report showed that US manufacturing activity continued to expand in April.
“We still have, on average, better US economic data, and that makes it tougher to be a gold bull,” said Rob Haworth, senior investment strategist at US Bank Wealth Management with $US115 billion ($A123.19 billion) under management.
Signs of improvement in the US economy raise the likelihood that the Federal Reserve will wind down its stimulus efforts by October and will be ready to raise interest rates some time in 2015, Haworth said, adding that this is likely to pressure gold lower.
Gold is a zero-yielding investment and struggles to compete with interest-bearing assets like Treasury bonds when interest rates are climbing.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $US1,285.25; previous PM $US1,286.75
Jun gold $US1,284.60, up $US3.50; Range $US1,280.80-$US1,287.70
May silver $US19.438, up 7.7 cents; Range $US19.380-$US19.545
Jul platinum $US1,403.90, up $US3.60; Range $US1,398.00-$US1,407.60
Jun palladium $US786.00, up $US2.35; Range $US783.00-$US787.55