Gold soars on fears Ukraine conflict poised to escalate

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Investing.com - Gold prices shot up on Wednesday and hovered near session highs on news Russian troops are amassing on the Ukraine border, which fueled safe-haven demand for the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,309.10 a troy ounce during U.S. trading, up 1.85%, up from a session low of $1,288.40 and off a high of $1,310.60.

The December contract settled down 0.28% at $1,285.30 on Tuesday.

Futures were likely to find support at $1,283.30 a troy ounce, Tuesday's low, and resistance at $1,314.60, the high from July 29.

Investors flocked to gold on Wednesday on fears the conflict in Ukraine is set to escalate.

Reports surfaced on Tuesday that Russia was amassing more troops near its border with Ukraine, which rattled markets worldwide by stoking concerns an escalating conflict could dampen global recovery.

Since the West slapped sanctions on Moscow several days ago for allegedly meddling in Ukraine's affairs by supporting separatists, Russian troops along the border have reportedly jumped to 20,000 from 8,000.

Elsewhere, investors camped out in safe-haven gold positions awaiting decisions on monetary policy from the European Central Bank and the Bank of England on Thursday.

Italy's economy shrank for a second consecutive quarter in the three months to June, which technically means the country is in recession.

ISTAT, Italy's statistical office, reported that the country's gross domestic product contracted by 0.2% in the second quarter, confounding expectations for growth of 0.2%.

Italy's economy shrank 0.1% in the preceding quarter.

Annualized GDP declined at a rate of 0.3%, worse than expectations for an increase of 0.1%.

Across the English Channel, manufacturing production in the U.K. rose less than expected in June, while industrial output also came in below forecasts, official data showed on Wednesday.

In a report, the U.K. Office for National Statistics said that manufacturing production inched up by 0.3% in June, disappointing expectations for a gain of 0.6%.

On an annualized basis, manufacturing production rose at rate of 1.9% in June, below forecasts for a 2.1% increase.

The report also showed that industrial production rose by 0.3% in June, missing expectations for a 0.6% gain.

Meanwhile, silver for September delivery was up 1.08% at $20.048 a troy ounce, while copper futures for September delivery were down 1.25% at $3.164 a pound.

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This article appears in: Investing , Forex and Currencies

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