Gold ends about 2% higher as Ukraine fears deepen


Gold soared past $1,300 on Wednesday on safe-haven buying triggered by worries that there could be an escalation of the military conflict in Ukraine and by a weak undertone in global equities.

Investors bought gold and U.S. Treasury bonds and initially sold equities after NATO said Russia had massed about 20,000 combat-ready troops on Ukraine's border and could use the pretext of a humanitarian mission to invade, its starkest warning yet that Moscow could soon mount a ground assault against its neighbor.

In addition, Russian President Vladimir Putin signed a decree banning or limiting imports of agricultural products for one year from countries that have imposed sanctions on Russia.

U.S. gold futures for December delivery settled 1.8 percent higher at $1,308.20 an ounce. Spot gold spiked 1.6 percent to $1,308 an ounce, after closing flat in the previous session.

Wednesday's rally sent gold prices above the 50-day moving average near $1,295 an ounce. In the previous session, the yellow metal turned higher after it held its 200-day moving average at above $1,280.

Geopolitical tensions in Ukraine and the Middle East have largely been responsible for gold's 7 percent gain this year. Gold, often seen as alternative investment to riskier assets such as equities, could gain if stocks fall further.

The physical markets have failed to provide support to prices recently due to the seasonally quiet summer period.

Premiums in top buyer China have been stuck at $2-$3 an ounce and demand is much weaker than last year, dealers said.

Gold / US Dollar Spot

—By Reuters with CNBC.

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