Gold extended a decline to the lowest in a week as investors weighed the health of the global economy against tension between Ukraine and Russia. Palladium fell from a 13-year high.
Bullion for immediate delivery lost as much as 0.8 percent to $1,275.28 an ounce, the lowest since Aug. 26, and was at $1,275.57 by 2:56 p.m. in Singapore, according to Bloomberg generic pricing. The metal rose to $1,296.61 on Aug. 28, the highest since Aug. 20, and last week capped the first weekly increase in three, amid what the U.S. and Europe said were incursions by Russia into Ukrainian territory.
The Bloomberg Dollar Spot Index rose to a seven-month high as prospects of an improving U.S. economy backed the case for the Federal Reserve to raise interest rates. Data today may show a gauge of U.S. manufacturing held near the strongest since April 2011 after reports yesterday showed factory output in China and the euro-area slowed more than estimated in August.
“As the U.S. economy continues to recover while other economies including Europe and China slow, global monetary policies will diverge,” said Yang Xi, a Hangzhou, China-based analyst at Yongan Futures Co. “While gold has been weighed down by the dollar, geopolitical safe-haven demand is supporting it in the background.”
Gold rebounded from a two-month low on Aug. 21 as unrest in Ukraine spurred haven demand. Ukraine yesterday warned of an escalating conflict in its easternmost regions, with U.S. President Barack Obama set to arrive in eastern Europe today to deliver reassurance to regional allies.
Gold for December delivery was at $1,276.50 an ounce on the Comex in New York from $1,287.40 on Aug. 29. Transactions yesterday will be booked today for settlement purposes as Sept. 1 was the U.S. Labor Day holiday.
Palladium for immediate delivery decreased 0.6 percent to $902.75 an ounce. Prices climbed to $912.26 yesterday, the highest since February 2001, as prospects of further sanctions against Russia increased concern supplies from the largest producer may be disrupted.
Spot silver retreated 0.4 percent to $19.391 an ounce and platinum decreased 0.5 percent to $1,417.75 an ounce.
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