Gold futures poised for second weekly advance on Fed stimulus outlook, Ukraine’s crisis

Gold futures headed for a second weekly gain as minutes from the Federal Reserves last policy meeting curbed expectations for higher interest rates in the US, while tension in Ukraine persisted. Meanwhile, assets in the SPDR Gold Trust, the biggest bullion-backed ETF, fell to a one-month low yesterday.

On the Comex division of the New York Mercantile Exchange, gold futures for settlement in June fell by 0.16% to trade at $ 1 318.40 an ounce by 06:51 GMT. Prices shifted in a daily range between $1 322.00 an ounce and $1 316.90 an ounce. Yesterday, the contract touched $ 1 324.90 an ounce, the strongest since March 24. The precious metal is 1.1% up this week, after gaining 0.6% in the previous five-day period.

Bullion rose this week, after pro-Russian protesters seized control of government buildings in three eastern Ukrainian cities, which forced Kievs authorities to sent security forces to restore order.

“You’ll see support for the gold price if the U.S. aren’t going to lift interest rates in the short-term as aggressively as people expected and there’s still anxiety between Russia and Ukraine,” Tom Price, an analyst at UBS AG, said in a Bloomberg Television interview from Sydney.

However, the precious metal has climbed 9.7 percent this year, rebounding from the worst annual drop since 1981, as a rout in emerging markets, Russia’s annexation of Crimea and concern the US economy may be faltering, boosted its safe-haven appeal.

Fed stimulus outlook

The minutes from the March 18-19 Fed policy meeting, at which bond-buying was trimmed for a third time, revealed that some bank’s policy makers said that projections for an interest-rate increase might be overstated.

“Any rally in the gold price we regard as a short-term thing,” said Tom Price, cited by Bloomberg. “As the U.S. moves into the spring-summer period, economic activity’s going to continue to lift there, they’ll deliver good macro data and that’s going to weigh on the gold price.”

The Federal Reserve trimmed its monthly bond-buying program by $10 billion at the last three meetings, leaving bond purchases at $55 billion per month, while maintaining its target for overnight lending between banks in a range of zero to 0.25% for six years now.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, were reduced to 806.22 tons yesterday, the weakest level since March 7. The fund has not received any fresh inflows in almost four weeks. 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.