Singapore - Gold held near the highest level in more than six months, after completing the longest weekly rally since August 2011, as a referendum in Crimea to leave Ukraine and join Russia boosted demand for a store of value.
Bullion for immediate delivery traded at $1,383.53 an ounce at 3:25 p.m. in Singapore from $1,383.05 on March 14, when prices capped a sixth weekly increase.
Gold earlier rose to $1,392.22, the highest since September 9, as holdings in exchange-traded products expanded to the highest this year.
The 14-day relative strength index was above 70 for a second day, signaling to some who study technical charts that prices may decline.
Gold advanced 15 percent this year as turmoil in Ukraine and slowing growth in China, the largest consumer, increased demand for protection of wealth.
Assets in bullion-backed ETPs increased for a third week to 1,766.4 metric tons, the most since December 27, data compiled by Bloomberg show, after a record contraction last year.
The metal rebounded from the biggest annual decline since 1981 even as the US Federal Reserve, which meets March 18-19, reduced asset purchases.
“Geopolitical tension has propelled gold higher, with CFTC and ETF positioning showing that investors have turned more positive on gold,” Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., said from Shanghai.
“Gold’s advance this week may be limited by the Fed, which is expected to continue to cut bond buying.”
The US and the European Union warned Russia not to annex Crimea after 95.5 percent of voters in the Black Sea peninsula backed leaving Ukraine to join Russia in the referendum, preliminary results show, setting the stage for sanctions.
Bullish Positions
In China, the yuan weakened as the central bank doubled the limit for the currency’s daily moves against the dollar from today, making dollar-denominated gold more expensive for mainland buyers.
Gold for April delivery added as much as 1 percent to $1,392.60 an ounce on the Comex in New York, the highest intraday level for a most-active contract since September 9.
The net-long position in gold rose 4 percent to 123,007 futures and options in the week ended March 11, the most since December 2012, US Commodity Futures Trading Commission data show.
Short holdings fell 20 percent to 21,073, the lowest since October.
“The uncertainty is likely to prevail as Crimea will head toward Russia, and Europe and the US on the other side are not willing to accept that,” said Dominic Schnider, head of commodities research at UBS AG’s wealth-management unit.
“Tension is going to be high, so on gold, further upside in the very short run.”
Silver for immediate delivery fell 0.3 percent to $21.3548 an ounce, after earlier gaining as much as 1.1 percent.
Platinum added 0.5 percent to $1,477.75 an ounce, while palladium increased 0.7 percent to $777.75 an ounce.
The world’s three biggest platinum producers support the Commission for Conciliation, Mediation and Arbitration to facilitate talks with the Association of Mineworkers and Construction Union, Johannesburg-based newspaper Business Day reported March 14, as the seven-week strike crippled output. - Bloomberg News