Gold futures weekly recap, March 17 – March 21

Gold futures rose on Friday, trimming a weekly drop, as the European Union followed the United States in imposing further sanctions on the Russian Federation, which urged market players to look for safe haven assets, such as the precious metal. Also fanning positive sentiment, assets in the SPDR Gold Trust, the biggest bullion-backed ETF, rose to a three-month high on Friday.

On the Comex division of the New York Mercantile Exchange, gold futures for settlement in April rose 0.36% on Friday to settle the week at $1 335.30 an ounce. Prices shifted in a daily range between $1 343.00 an ounce and $1 329.70 an ounce.

Gold futures have retreated from a six-month high of $1 392.60 an ounce on March 17 as turmoil over Ukraine left Russia and the West involved in their worst conflict since the end of the Cold War. The precious metal slid 3.5% this week, the most in three months, snapping six week of advances.

Demand for the precious metal was heightened after the European Union added 12 names to its list of Russians and Ukrainians penalized with asset freezes and travel bans, which brought the total number to 51 Russian and Ukrainian politicians and military commanders sanctioned by the currency bloc. This decision came one day after the United States imposed sanctions on 20 Russian officials and business leaders, which were said to have links with Russian President Vladimir Putin.

In addition, Fitch and Standard & Poor’s ratings agencies reduced Russia’s credit rating outlook to negative, which boosted demand for gold as a store of value.

Palladium futures at 2-1/2-year high

Meanwhile, palladium futures climbed to the strongest level in 2-1/2 years amid concern the sanctions on the largest supplier of the metal, Russia may reduce supplies.

On the Comex division of the New York Mercantile Exchange, palladium futures for settlement in June rose 3% on Friday to settle the week at $794.90 per troy ounce. Prices shifted in a daily range between $799.90 an ounce, the strongest since August 3rd, 2011 and $768.60 an ounce.

On Wednesday, Federal Reserve policy makers trimmed the bond-buying program by another $10 billion to $55 billion per month. Moreover, Federal Reserve Chair Janet Yellen, said that the first increase in borrowing costs should come “around six months” after the end of the stimulus program. The monetary easing program is expected to be brought to an end this fall.

Chinese demand

On the Shanghai Gold Exchange, trading volumes for spot bullion of 99.99 percent purity rose to a the strongest level in three weeks on March 19th. The precious metal for immediate delivery traded at a discount to bullion traded in London of $3.85 an ounce.

Higher bullion prices have recently hurt demand in China, which according to data by the World Gold Council, overtook India as the largest global consumer last year, consuming a record 1 066 tons.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, were increased to 816.97 tons on Friday, the strongest level in three months. Holdings in the fund are up 0.9% this year after it lost 41% of its assets in 2013 that wiped almost $42 billion in value. A total of 553 tons has been withdrawn last year.