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Gold inches up on concerns Ukraine conflict is dampening global recovery

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Investing.com -

Investing.com - Gold prices rose albeit in choppy trading on Tuesday after data out of Germany suggested the Russia-Ukraine conflict may be watering down global recovery, which bolstered the precious metal's safe-haven appeal.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,310.70 a troy ounce during U.S. trading, up 0.02%, up from a session low of $1,306.90 and off a high of $1,318.90.

The December contract settled down 0.04% at $1,310.50 on Monday.

Futures were likely to find support at $1,283.30 a troy ounce, the low from Aug. 5, and resistance at $1,324.30, Friday's high.

The ZEW Centre for Economic Research reported that its index of German economic sentiment dropped to 8.6 this month, down from 27.1 in July. It was the weakest reading in 20 months and came in well below economists' forecasts of 18.2, which sent investors snapping up safe-harbor gold positions.

The current conditions index deteriorated to a seven-month low of 44.3 from 61.8 in July, worse than expectations for a decline to 55.5.

Geopolitical tensions in Eastern Europe are apparently taking their toll on the German economy.

Recent economic reports have indicated that sanctions slapped on Russia due to its alleged meddling in the Ukraine conflict are dragging on the German economy, Europe's largest and Russia's largest trading partner in Europe.

The ZEW report noted that industrial production and incoming orders suggest "markedly reduced investment activities by German firms against the backdrop of uncertain sales prospects."

The report also indicated that economic growth in Germany will be weaker than expected in 2014.

Russian has said it is wrapping up military exercises on its border with Ukraine and has added the country is working with the International Red Cross to send humanitarian aid to Ukraine.

Still, uncertainty over whether the ceasefire can last took fueled demand for gold, as concerns have grown that Russian trucks shipping aid into Ukraine may be used as a cover to smuggle in troops for combat missions.

Meanwhile, silverfor September delivery was down 0.71% at $19.953 a troy ounce, while copper futures for September delivery were down 0.86% at $3.147 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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