BU: Gold hands back gains on lower geopolitical risk
Precious metals prices drifted lower in the early European session on Tuesday, as some of the acute geopolitical fears in the wake of the Malaysian Airlines plane crash starting to subside.
The spot gold price was last at $1,307.40/1,308.20 per ounce, down $4 on the close. It had been as low $1,304.60 per ounce earlier, which was the lowest since before the plane crash.
Gold prices jumped back above the key $1,300 level last week following news that a passenger plane had crashed in Ukraine, killing 298 people.
“Before the downing of the passenger jet bullion prices were heading lower, prices then had a knee-jerk reaction to the upside and judging by the complacency in other markets, we would not be surprised if precious metals prices resumed their weaker tone, at least for a while,” FastMarkets’ William Adams said.
European Union foreign ministers meet in Brussels later today to discuss further sanctions against Russia.
In the data, China’s CB leading index registered a 1.3 percent month-on-month advance – this is its highest reading since December 2013.
And the economic agenda will remain fairly busy, with the UK receiving public borrowing numbers and the Confederation of British Industry industrial orders.
In the US, the schedule includes the consumer prices index, the house prices index, existing home sales and the Richmond manufacturing index.
Adams said the CPI reading should be closely watched as a high reading may prompt concern that the Federal Reserve may act sooner than it wishes with tapering and subsequent tightening of monetary policy.
In currencies the dollar climbed to its highest against the euro at $1.348, which will also have placed pressure on dollar priced commodities.
Elsewhere the equity markets generally made gains so far. In Asia the Nikkei and Hang Seng are both strongly higher and in Europe both the FTSE 100 and German Dax made up more than half a percent.
And in other commodities, Brent crude oil is 32 cents higher at $108/108.05 per barrel.
The rest of the precious metals are just below unchanged. Silver is down a cent at $20.84/20.89 per ounce, platinum is $2 lower at $1,480/1,485 per ounce and palladium is $5 lower at $865/870 per ounce.
“Despite geopolitical concerns over Russian supply, palladium and platinum fell as the market instead focused on returning workers in South Africa boosting supply,” said ANZ Research in a note.
