Gold breaks above crucial chart levelComment on this story
London - Gold rose more than 1 percent on Monday, with its rally picking up steam after prices broke through chart resistance just below $1,300 an ounce, and as simmering tensions in Ukraine and a weaker dollar lent support.
Spot gold was up 1 percent at $1,301.10 an ounce at 15:12 SA time, while US gold futures for June delivery were up $13.60 an ounce at $1,301.20.
Momentum increased strongly as the metal broke out of the $10 range it had stuck to in the previous two sessions, traders said.
“Gold popped through the 200 day moving average at $1,298.30, and then buying accelerated,” Heraeus trader Alexander Zumpfe said.
“That doesn't change the rangebound picture, though.”
The metal has held between $1,315 and $1,285 an ounce since mid-April.
Silver outperformed, rising 2.6 percent to $19.56 an ounce.
Both metals took support from a softer dollar, with the US unit surrendering on Monday some of the gains it made last week against the euro after the European Central Bank indicated it was comfortable with easing monetary policy in June.
A stand-off between Russia and the West over Ukraine has also helped lift gold prices from April's 2-1/2 month lows.
Pro-Russian rebels declared a landslide victory in Sunday's referendum in Ukraine's Donetsk and Luhansk regions.
The Ukrainian authorities dismissed the vote as a farce, and the European Union criticised the referendum.
“Upside risk still comes from a deterioration of the situation in Ukraine,” Mitsubishi analyst Jonathan Butler said in a note on Monday.
GOLD BUYING SUBDUED
Subdued buying in the physical markets also hurt sentiment towards gold.
In top buyer China, local premiums over the global benchmark have climbed to about $3 an ounce after trading at a discount for most of the last two months on weak demand.
But they are still much lower than the over-$20 premiums seen earlier in the year.
“China's weakening demand for physical metals was once again confirmed by concrete figures (last week), especially investment demand: according to the China Gold Association demand for gold bars fell in the first quarter by 44 percent compared to the same period last year,” Swiss precious metals house Heraeus said in a note.
Spot platinum was up 0.9 percent at $1,434.25 an ounce and spot palladium was up 0.7 percent at $803.50 an ounce.
Platinum miner Lonmin said on Monday that restructuring and job cuts were inevitable as it posted a steep fall in six-month earnings, suffering from South Africa's longest and most costly labour stoppage.
The pay dispute in the world's top platinum producing country has cut 40 percent of global production and halted operations at Lonmin's mines and processing plants. - Reuters