March 26, 2018 / 10:52 AM / a month ago

PRECIOUS-Gold at more than five-week high as U.S. expels Russian diplomats

    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Recasts, updates prices; adds comment, additional byline, NEW
YORK to dateline)
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, March 26 (Reuters) - Gold prices rose to
more than five-week highs on Monday after the United States said
it would expel 60 Russian diplomats, prompting investor flight
into assets considered safe havens.
    The United States was joining governments across Europe in
taking action against the Kremlin after a nerve agent attack on
a former Russian spy in Britain.             
    Gold, which is sought as a store of value in times of
political and financial uncertainty, rose to its highest since
Feb. 16 at $1,355.97 an ounce.
    Spot gold was up 0.6 percent at $1,354.62 per ounce by 1:33
p.m. EDT (1733 GMT), while U.S. gold futures         for April
delivery settled up $5.10, or 0.4 percent, at $1,355 per ounce. 
    "I would attribute the rise in gold in the afternoon to the
political developments," said Quantitative Commodity Research
consultant Peter Fertig. "You could expect the Russians to
retaliate."
    The U.S. dollar index        fell to a five-week low against
a basket of major currencies.
    The specter of a global trade stand-off, however, appeared
to be receding after the United States and South Korea agreed to
revise a trade pact, with U.S. automakers winning improved
market access and Korean steelmakers hit with quotas but
avoiding hefty tariffs.             
    "We don’t know what the negotiations will bring, so there’s
less of a fear, because negotiations seem to be going on," said
George Gero, managing director of RBC Wealth Management.
    The Wall Street Journal, meanwhile, reported that the United
States and China had started negotiations to improve U.S. access
to Chinese markets.             
    Analysts said gold continued to be supported by last week's
statement from the U.S. Federal Reserve, which forecast at least
two more increases to interest rates in 2018, one less than
previously expected by many observers.   
    Investors continued to monitor other developments, such as
U.S. President Donald Trump's appointment of John Bolton as
national security adviser and tensions between Saudi Arabia and
Yemen's Houthi militia.             
    Speculators cut their net long positions in gold in the week
to March 20 by 23,822 contracts to 121,838 contracts, U.S.
Commodity Futures Trading Commission data showed on Friday.
            
    "I think there's a high probability that we will be trading
above $1,400, maybe into $1,700 by the end of the year," said
Dan Pavilonis, senior market strategist at RJO Futures.
    Meanwhile, silver        climbed 1 percent at $16.68 an
ounce, earlier hitting $16.79, its highest since March 7.
Platinum        rose 0.4 percent at $950.90 per ounce and
palladium        declined 0.5 percent at $971.90.

 (Additional reporting by Eileen Soreng in Bengaluru
Editing by David Goodman and Chizu Nomiyama)
  
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