Gold advanced for a third day on increased tensions in Ukraine and as the dollar weakened, countering concern that U.S. interest rates could increase sooner than expected because of the strengthening economy.
Bullion for immediate delivery rose 0.5 percent to $1,289.05 an ounce by 2:39 p.m. in Singapore, according to Bloomberg generic pricing. The metal dropped to $1,273.14 on Aug. 21, the lowest level since June 18, as minutes of the Federal Reserve’s last meeting signaled that policy makers may raise interest rates sooner than anticipated.
The U.S. said Russia may be directing a counteroffensive by separatist rebels in Ukraine. Fighting in eastern regions is spreading to previously peaceful areas, Jen Psaki, the U.S. State Department spokeswoman, said Wednesday in Washington. The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 leading global peers, fell 0.1 percent to 1,026.85 after sliding 0.3 percent in the previous two days.
“Investors continued to keep a wary eye on the escalating tensions in Ukraine,” Liu Xu, a Beijing-based analyst at Capital Futures Co., said in a report. “Geopolitical headwinds helped increase haven demand for gold.”
Silver for immediate delivery rose 0.9 percent to $19.6318 an ounce. Platinum added 0.4 percent to $1,424.37 an ounce, extending a rebound from $1,413.50 on Aug. 26, the lowest level since May 1. Palladium gained 0.3 percent to $895.20 an ounce. The metal is heading for its seventh monthly increase, the longest winning streak since January 2011.
The reports of incursions “indicate a Russian-directed counteroffensive is likely under way in Donetsk and Luhansk,” cities in the east Ukraine, said Psaki, the State Department spokeswoman. “This information doesn’t correspond with reality,” said Dmitry Peskov, Russian President Vladimir Putin’s spokesman.
© Copyright 2014 Bloomberg News. All rights reserved.