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Gold Rebounds as Turkey Downs Russian Jet, Sparking Haven Demand

Tuesday, 24 November 2015 02:46 PM

Gold gained for the first time in three sessions as Turkey said it shot down a Russian fighter jet close to the Syrian border, sparking demand for haven assets.

European and emerging-market stocks fell and government bonds rose amid damped demand for riskier assets as traders assessed the fallout from the first direct clash of foreign powers embroiled in the Syrian civil war. While investors have mostly ignored gold in the past two years, the metal also regained its haven status briefly this month after terrorist attacks in Paris.

“Gold futures got a nice bounce up on increased geopolitical news with Turkey and the Russian airplane development,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview.

On the Comex, gold futures for February delivery climbed 0.6 percent to settle at $1,073.30 an ounce at 1:42 p.m. in New York, after rising as much as 1.3 percent.

Prices pared gains after a government report showed that the U.S. economy expanded at a faster pace in the third quarter than previously reported. Improving growth bolsters the case for the Federal Reserve to increase interest rates for the first time since 2006. Gold dropped to a five-year low last week as traders boosted wagers that officials will raise borrowing costs when they gather next month. Higher rates cut the appeal of precious metals because they don’t pay interest like other assets such as bonds.

‘Limited’ Gains

Bullion, long considered a haven during times of geopolitical turmoil, failed to sustain brief gains last week following the Nov. 13 terrorist attacks in Paris that left 130 people dead. Even as events such as the Greek bailout negotiations in July and the downing of a Malaysian passenger jet over Ukraine in 2014 spurred earlier bouts of buying, investors have mainly shunned the metal since it entered a bear market in 2013. Prices are heading for a third straight annual drop.

The impact of geopolitical shocks is “very limited” because investors remain focused on U.S. economic data and the Fed’s decision on when it will raise rates, Georgette Boele, an Amsterdam-based strategist at ABN Amro Bank NV, said by e-mail. “Safe haven currently does not have a dominant role on gold at the moment.”

Holdings in gold-backed exchange traded products fell 6.6 metric tons, the most in more than two weeks, to 1,495.1 tons on Monday, data compiled by Bloomberg show. Assets are at the lowest since February 2009.

Silver futures for March delivery rose 0.9 percent to $14.188 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for January delivery slid 0.7 percent to $841.70 an ounce, a third straight decline, while palladium futures for December delivery rose less than 0.1 percent to $541.50 an ounce.

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Gold gained for the first time in three sessions as Turkey said it shot down a Russian fighter jet close to the Syrian border, sparking demand for haven assets.
gold, Turkey, Russia, jet
Tuesday, 24 November 2015 02:46 PM
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