News Column

Gold Ends At 3-Week High On Safe Haven Appeal

May 5, 2014

WASHINGTON (Alliance News) - Gold futures moved up for a second straight session to end at a three-week high on Monday, as investors continued to seek the safe haven appeal of the precious metal with the situation in eastern Ukraine further deteriorating amid reports of fierce fighting from many places.

News reports said Ukrainian forces were involved in some fierce battle with pro-Russia fighters equipped with heavy, large-caliber weapons. The BBC indicated at least 800 pro-Russian fighters at the center of Slovyansk. Although there has been unconfirmed reports of casualties on both sides, the Ukraine interim interior minister confirmed the death of its four army officers.

Gold for June delivery, the most actively traded contract, gained USD6.40 or 0.5% to close at USD1,309.30 an ounce on the Comex division of the New York Mercantile Exchange on Monday.

Gold for June delivery scaled an intraday high of USD1,315.80 and a low of USD1,299.70 an ounce.

Gold futures snapped a four-day loss to end higher last Friday, on its safe haven appeal after some upbeat employment data from the US

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped to 782.85 tons on Monday from its previous close of 785.55 tons.

The dollar index, which tracks the US unit against six major currencies, traded at 79.49 on Monday, down from its previous close of 79.51 late Friday in North American trade. The dollar scaled a high of 79.53 intraday and a low of 79.43.

The euro traded lower against the dollar at USD1.3877 on Monday, as compared to its previous close of USD1.3884 late Friday in North America. The euro scaled a high of USD1.3886 intraday and a low of USD1.3866.

In economic news from the US, a report from the Institute for Supply Management showed the US service sector expanded at a faster than expected rate in April, rising to 55.2, from 53.1 in March. Economists expected the index to increase to a reading of 54.2.

China's manufacturing sector contracted for the fourth successive month in April and the latest fall exceeded the preliminary estimate, survey data showed Monday. The HSBC Purchasing Managers' Index fell to 48.1 in April from 48 in March. The score was fractionally below the flash reading of 48.3. This is the fourth consecutive below-50 score, signaling contraction in the manufacturing sector.

Eurozone producer prices continued to decline in March albeit at a slightly slower pace, with concerns of deflation taking hold, data from Eurostat showed Monday. Industrial producer prices dropped 1.6% year-on-year, after a 1.7% fall in February, which was the biggest decrease since December 2009. Economists had forecast the pace of decline to remain unchanged.

Eurozone is experiencing a more lasting recovery and any risk of deflation remains very low, the European Commission said Monday. In its Spring 2014 forecast, the executive-arm of the EU projected 1.7% GDP growth for 2015, lower than the 1.8% predicted in February. The growth forecast for this year was retained at 1.2%.

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Source: Alliance News