Aug. 28 (Bloomberg) -- Gold futures rose to the highest in in more than a week as escalating tension in Ukraine spurred haven demand. Silver advanced.
Ukrainian President Petro Poroshenko pledged to step up the country’s defenses against what he earlier called a “de facto” Russian incursion after after separatists gained ground in eastern regions. The U.S. said Russia may be directing the attacks, and France and Germany threatened President Vladimir Putin’s government with further sanctions.
Bullion has climbed 7.3 percent this year as violence in Eastern Europe and the Middle East revived investor buying. The gains have defied bearish forecasts from banks including Goldman Sachs Group Inc., and gold has outperformed broad measures of commodities, global equities and Treasuries in 2014.
“The market is getting nervous about the Ukraine situation, and people are moving to gold,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Talks of further sanctions against Russia are increasing the safe-haven premium of gold.”
Gold futures for December delivery rose 0.5 percent to settle at $1,290.40 at 1:50 p.m. on the Comex in New York, after touching $1,297.60, the highest for a most-active contract since Aug. 20.
The precious metal pared gains after a government report showed the U.S. economy expanded more than previously forecast in the second quarter. Prices fell 3 percent in July amid concern that faster growth would push the Federal Reserve toward raising interest rates, damping demand for an inflation hedge.
Gold tumbled 28 percent last year on expectations for reduced U.S. stimulus. Fed Chair Janet Yellen said last week that if progress in labor markets “continues to be more rapid than anticipated,” interest rates may rise sooner than expected, and further increases could be more rapid.
Silver futures for December delivery rose 0.7 percent to $19.609 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for October delivery gained 0.4 percent to $1,425.20 an ounce. Palladium futures for December delivery added 0.4 percent to $898.10 an ounce. Prices are heading for a seventh straight monthly advance, the longest stretch since January 2011.
Russia is the biggest supplier of palladium. Prices climbed 25 percent this year as increased usage in catalytic converters and a five-month mine strike that ended in June in South Africa, the second-biggest producer, added to supply shortages.