PRECIOUS-Gold rises on Ukraine tensions; physical demand weak

Mon May 12, 2014 4:05pm EDT

Related Topics

* Referendum in eastern Ukraine fuels tensions

* Bullion briefly rises above $1,300 an ounce

* Chinese physical demand seen as soft

* Coming up: U.S. import, export prices Monday (Adds details on S.Africa mining violence, updates prices)

By Frank Tang and Jan Harvey

NEW YORK/LONDON, May 12 (Reuters) - Gold rose on Monday as heightened tensions in Ukraine spurred some safe-haven buying, but a lack of strong physical demand could weigh on prices, analysts said.

Bullion briefly rose above $1,300 an ounce after pro-Moscow rebel leaders in eastern Ukraine called for their region to become part of Russia after declaring victory in a weekend referendum on self-rule, a move that could drag the country into war.

However, gold's failure to hold above key support of $1,300 an ounce and gains in U.S. equities, with the S&P 500 index moving within 1 percent of its record high, cut the metal's gains.

"The floor looks to be softening for gold, with physical demand not making up for soft investor demand," said Christopher Louney, precious metals analyst at Barclays Capital. "We still think that gold will move lower."

Spot gold was up 0.6 percent at $1,295.95 an ounce by 3:50 p.m. EDT (1950 GMT), having earlier hit a high of $1,303.80.

U.S. COMEX gold futures for June delivery settled up $8.20 an ounce at $1,295.80, with volume about 10 percent above its 30-day average, preliminary Reuters data showed.

Silver outperformed gold, rising 2.1 percent to $19.50 an ounce.

GOLD BUYING SUBDUED

Subdued buying in the physical markets hurt sentiment towards gold.

In top buyer China, local premiums over the global benchmark rose slightly, but they are still much lower than the over-$20 premiums seen earlier in the year.

China's weakening demand for physical metals was reflected by a 44 percent year-over-year fall in the demand of gold bars in the first quarter, according to data by the China Gold Association.

Spot platinum climbed 0.8 percent to $1,432.75 an ounce and spot palladium was up 0.9 percent at $805 an ounce.

Lingering supply worries underpinned platinum prices after one South African miner was killed on Monday and three others died over the weekend in violence at strike-hit platinum mines, police said, threatening Lonmin hopes to end the dispute this week.

The pay dispute in the world's top platinum producing country has cut 40 percent of global production and halted operations at Lonmin's mines and processing plants. 3:49 PM EDT LAST/ NET PCT LOW HIGH CURRENT

SETTLE CHNG CHNG VOL US Gold JUN 1295.80 8.20 0.6 1277.70 1304.50 124,979 US Silver MAY 19.500 0.423 2.2 19.100 19.600 293 US Plat JUL 1441.90 12.00 0.8 1422.20 1445.60 8,240 US Pall JUN 808.75 9.00 1.1 796.00 809.40 3,119 Gold 1295.95 7.12 0.6 1280.50 1303.80 Silver 19.500 0.400 2.1 19.050 19.640 Platinum 1432.75 10.95 0.8 1423.50 1442.00 Palladium 805.00 7.40 0.9 798.80 807.50 TOTAL MARKET VOLUME 30-D ATM VOLATILITY

CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 147,110 132,810 179,840 14.87 -0.07 US Silver 43,059 62,466 55,838 22.41 0.10 US Platinum 8,568 9,309 12,453 15.52 0.34 US Palladium 3,598 5,902 5,737 23.89 -1.54 (Additional reporting by A. Ananthalakshmi in Singapore; Editing by William Hardy, Peter Galloway and Marguerita Choy)

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