2014.03.1202:30:25UTC+00Gold spikes up for second day as Ukraine dispute triggers haven demand

Gold futures soared for the second consecutive day as the standoff between Russia and Ukraine triggered demand for a haven.

Ukraine started military drills as Russian forces empowered their hold on the Crimean peninsula. On March 17, the European Union will discuss harsher penalties, barring “obvious changes in Russia’s actions,” German Foreign Minister Frank-Walter Steinmeier declared today. This year, gold has surged 12 percent in the middle of indications of a stumbling U.S. economy and chaos in Eastern Europe.

“The Ukraine situation is lending support to gold,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “The fear premium is back because of the developments.”

Gold futures for April delivery rallied 0.4 percent to finished at $1,346.70 an ounce at 1:37 p.m. on the Comex in New York. Yesterday, the financial worth advanced 0.2 percent. On March 3, the metal touched $1,355, the topmost for a most-active contract since October 30.

The commodity decreased 28 percent last year in the middle of surges in equities and concern that the Federal Reserve would taper the pace of bond purchases.

Bullish Determinant

“The Ukraine matter is still a worry among traders and investors, and has moved closer to the front burner of the marketplace,” Jim Wyckoff, a senior analyst at Kitco Metals Inc., a research company in Montreal, said in a report. “The Russian occupation of Crimea is a bullish factor for the safe-haven gold market.”

In Crimea, residents will have the choice of joining Russia in a March 16 referendum.

Gold skyrocketed 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the monetary system and bring down interest rates to a record to helped the economy.

The Fed declared a $10 billion reduction to bond purchasing at each of its past two assemblies, leaving purchases at $65 billion. Fed Chair Janet Yellen said last month that the central bank possibly will continue its technique of slashing down stimulus.

Yesterday, holdings in exchange-traded goods backed by gold hiked 8.4 metric tons, the most since October 2012, to 1,762.5 tons, data recorded by Bloomberg show. Last month, assets plummeted to the weakest since October 2009.

The Philadelphia Stock Exchange Gold & Silver Index of 30 firms has soared 18 percent this year after tumbling down 49 percent in 2013.

The financial values of precious metals with broader industrial applications decreased as copper ceded down to the weakest point since July 2010.

Silver futures for May delivery downgraded 0.5 percent to $20.815 an ounce on the Comex. The price depreciated for the third consecutive session, the longest slump in seven weeks.

On the New York Mercantile Exchange, platinum futures for April delivery backed down 0.9 percent to $1,464.60 an ounce.

Palladium futures for June delivery relinquished 0.8 percent to $770.50 an ounce.