Gold steady on Ukraine tensions, poised for second weekly drop

SINGAPORE Fri May 9, 2014 12:42pm IST

24 karat Buffalo gold reserve proof coins are seen at the United States West Point Mint facility in West Point, New York June 5, 2013. DREUTERS/Shannon Stapleton/Files

24 karat Buffalo gold reserve proof coins are seen at the United States West Point Mint facility in West Point, New York June 5, 2013. D

Credit: Reuters/Shannon Stapleton/Files

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SINGAPORE (Reuters) - Gold prices were steady on Friday, supported by geopolitical tensions in Ukraine, with investors eyeing fund flows and Asian physical demand for further cues.

But the metal was on track to post its second straight weekly decline as more strong U.S. data showed that the world's largest economy was recovering well, supportive of the Federal Reserve's stance to keep trimming monetary stimulus.

"People are not very enthusiastic to enter the market at the moment," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"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."

Spot gold was little changed at $1,290.25 an ounce by 0641 GMT. The metal is down 0.7 percent for the week, its second straight weekly decline.

Data on Thursday showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week, indicating the labour market was strengthening despite a run-up in applications in prior weeks.

Gold is often seen as a safe-haven investment during times of economic and geopolitical uncertainty.

Ukraine tensions have been behind much of gold's 7 percent rise this year, but traders fear the gains would dissipate quickly once the situation is resolved.

Pro-Moscow separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war.

The decision, which contradicted the conciliatory tone set by Putin just a day earlier, caused consternation in the West, which fears the referendum will tear Ukraine apart.

Traders said they were eyeing flows in SPDR Gold Trust, the top gold-backed exchange-traded fund. Holdings of the fund have been unchanged so far this week after a near 10-tonne decline last week.

Physical demand has also been muted despite the drop in prices, with many hoping that a stabilization in prices would bring back buyers.

(Editing by Edwina Gibbs, Muralikumar Anantharaman and Subhranshu Sahu)

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