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Gold made slight gains during early trading in Europe today, as the crisis in Eastern Europe is in focus with a Victory Day military parade in Moscow. Meanwhile, pro-Russian separatists said they will press on with planned independence referendum, supporting safe-haven demand. Elsewhere, the economic recovery of the US continued to pressure the precious metal.

Gold futures due in June traded for $1 291.3 per troy ounce at 7:22 GMT on the COMEX in New York today, adding 0.28% to Thursdays closing price. Daily high and low stood at $1 292.9 and $1 288.5 per troy ounce. Over the previous four sessions the precious metal lost 1.16%, and is on the path to a second straight weekly loss amid a strengthening US economy.

Russia is holding its annual parade, celebrating victory over Nazi Germany in the Second World War. Festivities are pumped up by an uplift in patriotic fervor after the annexation of Crimea, and with the ongoing confrontation with the West. Tomorrow a similar event will be on display in Sevastopol, one of the main cities in the Crimea. Reports that Russian President Vladimir Putin might be there prompted German Chancellor Angela Merkel to dub it a “pity”, should Mr Putin appear at the parade in the disputed peninsula.

However, President Putin made some steps towards reducing tensions in eastern Ukraine as he proposed separatists postpone the planned independence referendum in Donetsk and Luhansk regions. President Putin went on to add that the presidential election in Ukraine due on May 25th is a step in the right direction, and that he is withdrawing forces from the border.

The rebels, however, disregarded his pleads, and said the referendum will go ahead as planned. “The referendum will take place on 11 May. We are getting ready, ballot papers are being printed, everything remains in force. Nothing will change, it will not be delayed,” pro-Russian rebels in Luhansk were quoted as saying.

The referendum will take place in the mainly Russian-speaking eastern regions of Luhansk and Donetsk, which saw bloody battles between the military and rebels recently. Fears that a scenario, similar to that in the Crimea is unfolding is keeping a floor under gold prices.

“Right now, the Ukraine situation is supportive of prices, but data coming from the U.S. continues to be strong and that could keep investors away and weigh on prices,” said for Reuters Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, addressing the improving state of the US economy.

US data

Yesterday, a report on jobless claims, a significant indicator for the health of the US economy, revealed unemployment figures had scored better than expected for the week through May 3rd. Initial claims were at 319 000, down from a revised 345 000 for the previous week, while continuing claims had shrunk to 2.685 million from 2.761 million the previous week.

However, Fed’s Chair Janet Yellen testified that the Federal Reserve will continue supporting the economy. “Many Americans who want a job are still unemployed… and inflation is below the central bank’s 2% target,” she said, , arguing that the central bank should continue to apply the stimulus program for some time.

“The gold market interpreted Yellen’s comments as negative for bullion as the U.S. economy continues to show improvement,” said for Bloomberg Sun Yonggang, a Shanghai-based macroeconomic strategist at Everbright Futures Co. “Gold has also been pressured lower by a weaker euro.”

The euro fell 0.48% against the dollar yesterday, after European Central Bank President Mario Draghi indicated a possible easing of monetary policy in the following months.

Meanwhile, holdings at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 782.85 tons for the fifth day yesterday, keeping at the lowest point since early 2009. The fund has lost 10 tons last week. The discouraging outflow suggests investor interest in the precious metal is at a multi-year low, as the world economy recovers.

Technical view

According to Binary Tribune’s daily analysis, in case Gold June futures manage to breach the first resistance level at $1 293.9 on Monday, the contract will probably continue up to test $1 300.0. In case the second key resistance is broken, the precious metal will likely attempt to advance to $1 304.6.

If the contract manages to breach the first key support at $1 283.2, it will probably continue to slide and test $1 278.6. With this second key support broken, the movement to the downside may extend to $1 272.5.

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