Gold futures have rallied to a 16-week high as fears that Ukraine would plunge into a sovereign debt default fanned demand for wealth preservation.
Gold for April delivery, the most active contract, on Monday rose $US14.40, or 1.1 per cent, to settle at $US1,338.00 a troy ounce on the Comex division of the New York Mercantile Exchange. This was gold's highest settlement since October 30.
Gold prices have been marching higher this year, as some investors who slashed holdings of the precious metal last year returned to the market in search of a haven from political and economic uncertainty. Some traders view gold as a hedge against geopolitical risks as the reserve asset isn't tied to a particular country or regime.
Ukraine would seek a loan from the US and Poland in one to two weeks, the country's finance ministry said in a statement on Monday. The move comes amid escalating concerns that the troubled country could default on its debt obligations, with yields on Ukrainian bonds rocketing higher while the country's currency sinks to all-time lows.
Separately, Ukraine's acting government issued an arrest warrant for ousted President Viktor Yanukovych and said it was opening a criminal case into the "mass murder" of civilians stemming from violent clashes in the capital last week.
"All that uncertainty supports the gold market," said Frank Lesh, a broker and futures analyst with FuturePath Trading.
While the situation in Ukraine appears to be improving, it remains fragile, Lesh said.
"There's nothing here that says if you bought gold on Ukraine, you're supposed to sell it," he said.
Silver for March delivery, the most active contract, rose 26.9 US cents, or 1.2 per cent, to settle at $US22.051 a troy ounce on the Comex, it's highest level since October 30.
Gold and silver futures tend to move in the same direction, as the sister metals are considered currency alternatives.
In Thailand, three people were killed and dozens injured in a blast on Sunday in Bangkok after a grenade was thrown into an area where antigovernment protesters had been camping out.
"The Ukrainian developments and some civil unrest and violence in Thailand are prompting increased safe-haven demand for gold," said Jim Wyckoff, a senior analyst with Kitco.com, in a note to clients.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,334.75; previous PM $1,3323.25
Apr gold $1,338.00, up $14.40; Range $1,318.70-$1,339.20
Mar silver $22.051, up 26.9 cents; Range $21.520-$22.180
Apr platinum $1,441.40, up $13.50; Range $1,420.20-$1,443.50
Mar palladium $743.05, up $3.05; Range $733.65-$743.25
