PRECIOUS-Gold near six-month high on safe-haven bids amid Ukraine crisis

Mon Mar 17, 2014 3:35am EDT

* Gold rises to highest since September
    * Asian shares fall to one-month low
    * Chinese prices at $6 discount; physical demand weak

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, March 17 (Reuters) - Gold was trading near its
highest level in over six months on Monday on weaker equities
and as Crimea voted to join Russia, heightening tensions between
Moscow and the West.
    Bullion has gained 15 percent this year as mounting
geopolitical tensions and fears over slowing economic growth
spurred demand for the metal seen as a safe-haven asset.
    Spot gold was up 0.1 percent to $1,383.60 an ounce by
0726 GMT, after earlier hitting $1,391.76 - its highest since
Sept. 9. Asian shares were near one-month lows. 
    "The political environment regarding Ukraine is very
supportive of (gold) prices and it will continue for a while. I
think it is easy for prices to go all the way to $1,500 in the
next few weeks," said Dick Poon, general manager of refiner and
dealer Heraeus Metals in Hong Kong.
    Crimea's Moscow-backed leaders declared a 96-percent vote in
favour of quitting Ukraine and annexation by Russia in a
referendum that Western powers said was illegal and will bring
immediate sanctions. 
    Barack Obama spoke to Vladimir Putin, telling the Russian
president that he and his European allies were ready to impose
"additional costs" on Moscow for violating Ukraine's territory.
    New money has been flowing into gold-backed exchange-traded
funds as investors seek safety from riskier assets such as
equities.
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 3.29 tonnes to 816.59
tonnes on Friday. 
    Hedge funds and money managers raised their bullish bets in
gold futures and options for a fifth consecutive week to the
most bullish stance since mid-December 2012, according to Friday
data from the Commodity Futures Trading Commission.
 
    
    PHYSICAL MARKETS
    Consumer interest in gold has been waning with the climb
towards $1,400 as physical buyers expect prices to fall in the
next few months.
    Prices in China are at a $6 an ounce discount to spot
prices, indicating a sharp drop-off in demand compared with the
beginning of the year when prices were at a premium of $20.
    "Things have been pretty quiet since the Chinese New Year
holiday," said one Hong Kong-based dealer. "People don't want to
buy now since they think prices could fall again."
    
    PRICES AT 0726 GMT
 Metal             Last     Change   Pct chg
                                             
 Spot gold          1383.6     1.86      0.13
 Spot silver         21.34     -0.1     -0.47
 Spot platinum     1474.25    12.45      0.85
 Spot palladium     775.75     9.35      1.22
 Comex gold         1383.9      4.9      0.36
 Comex silver       21.365   -0.048     -0.22
 Euro               1.3889                   
 DXY                79.525                   
                                             
 COMEX gold and silver contracts show the
 most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Richard Pullin and
Anupama Dwivedi)