XAUUSD Above $1,309 Amid Escalating Tension in Ukraine and Gaza

by on July 29, 2014 9:51 am GMT

XAUUSD held above $1,305 an ounce before the US Federal Reserve begins a two-day policy meeting today amid escalating tension in Ukraine and Gaza.

Gold for immediate delivery traded at $1,3010.11 an ounce by 9:40 GMT from $1,304.09 yesterday. The gold is on course for a monthly decline on the outlook for higher US borrowing costs as the world’s largest economy improves.

Bullion rebounded 8.6 percent this year after halting a 12-year rally in 2013 partly as unrest in Ukraine and the Middle East boosted haven demand. Holdings in bullion-backed exchange-traded products have shrunk 1.8 percent this year after a record 33 percent contraction in 2013 on speculation the Fed will reduce stimulus. The central bank cut asset purchases for a fifth consecutive time at its June meeting.

Russia may ban imports of chicken from the US and fruit from Europe as it faces tougher sanctions as soon as this week over its incursion into Ukraine, while Israeli Prime Minister Benjamin Netanyahu told his country to brace for an extended military campaign in Gaza.

Gold for December delivery traded at $1,307 an ounce on the Comex in New York from $1,305.80 yesterday, when prices increased for a second day. Data this week may show US employers boosted payrolls in July after a report yesterday showed an unexpected decrease in pending sales of previously owned homes.

Silver for immediate delivery was at $20.5579 an ounce from $20.5849. Spot platinum dropped 0.4 percent to $1,482.63 an ounce while palladium was little changed at $880.26 an ounce.