ET:Gold climbs towards 3-week high on softer dollar, Ukraine tensions
SINGAPORE: Gold climbed to trade near its highest in three weeks on Wednesday, helped by a weaker dollar and simmering tensions in Ukraine that triggered safe-haven bids.
Violence flared on Tuesday in the eastern Ukrainian port of Mariupol, where a spokesman for pro-Moscow militants told Russia's Itar-Tass news agency that one person was killed and three wounded in an attack on a checkpoint.
Supporters of Russia and of a united Ukraine have been burying their dead as Ukraine slides further towards war, and accusing each other of tearing the country apart.
Spot gold rose 0.2 per cent to $1,309.90 an ounce by 0632 GMT, after earlier hitting a session high of $1,313.50. It touched a three-week high of $1,315.60 on Monday.
"The price trend is not very clear but because of the increased tensions in Ukraine, gold prices are supported," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. "It could fall back as the situation eases."
"There is no physical demand. The physicals markets have been very quiet over the last couple of months."
Periods of economic and political uncertainty generally tend to burnish gold's appeal as a safe-haven investment.
The rising Ukraine tensions could also further worsen relations between Russia and the West, boosting gold. The Obama administration is working on another round of sanctions against Russia if it dramatically ramps up aggression against Ukraine.
Gold was also helped by a weaker US dollar, which was languishing at six-month lows against a basket of major currencies.
A lower greenback makes it cheaper for holders of other currency to buy gold.
ASIAN BUYING
Physical demand in top buyer Asia and elsewhere has been weak due to the volatility in prices and as consumers expect prices to drop further, dealers said.
Chinese buying has been subdued as a weaker currency has discouraged importing banks from purchasing big quantities.
Gold prices in Shanghai were trading $2 an ounce above the global benchmark, reversing the trend from recent months when prices were largely at a discount.
China's demand for gold bars fell nearly 44 per cent in the first quarter of 2014 from year ago, while total gold consumption edged up about 0.8 per cent, the China Gold Association said on Wednesday.
Despite the price premiums, demand was muted, dealers said.
