PRECIOUS-Gold rises as Ukraine tensions hurt German sentiment

Tue Aug 12, 2014 3:13pm EDT

* German market morale hit 1-1/2 year low in August
    * Dollar rises vs euro; S&P 500 slips
    * Demand still weak in major Asian markets
    * Coming up: U.S. retail sales on Wednesday

 (Updates market activities)
    By Frank Tang and Jan Harvey
    NEW YORK/LONDON, Aug 12 (Reuters) - Gold prices edged higher
on Tuesday on signs that the stand-off between Russia and
Ukraine was hurting economic confidence in the euro zone
economy.
    Analyst and investor morale in Germany, Europe's largest
economy, plunged in August to its lowest level in more than a
year and a half as the crisis in Ukraine took its toll, the ZEW
monthly survey showed. 
    "Improving gold prices are due to escalations of
Ukraine-Russia tensions and Iraq conflicts, but traders are also
worried about Europe snail's pace recovery," said George Gero,
vice president at RBC Capital Markets in New York.
     Spot gold was up 0.1 percent at $1,309.30 an ounce
by 2:55 p.m. EDT (1855 GMT).
    U.S. COMEX gold futures for December delivery settled
up 10 cents at $1,310.60 an ounce, with trading volume about 35
percent below its 30-day average.
    Gold's gains came as the dollar rose against the euro on the
German sentiment report, and the S&P 500 equities index 
slipped on heightened uncertainty over Ukraine and the Middle
East. U.S. Treasury bond yields inched up but remained near a
14-month low hit during a bond market rally that suggested a
flight to safety.   
    Russia said a convoy of 280 trucks had left for Ukraine
carrying humanitarian aid, amid Western warnings against using
help as a pretext for an invasion.    
    Gold has gained about 9 percent this year, largely on
tensions between the West and Russia over Ukraine and on
violence in the Middle East. The metal is seen as an alternative
investment to riskier assets such as equities. 
    While geopolitical tension has inspired some sporadic
investment buying, gold has not enjoyed much physical demand. In
top consuming region Asia, demand has been sluggish after a
record year in 2013. Also, investors have been cutting positions
in SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund.    
    Gold has largely been stuck in a range between $1,280 and
$1,325 in the last 30 days despite rising geopolitical tensions.
    "Unless we see another major change, I don't think the
current news is going to lead us to break out of that range,"
said Mitsubishi analyst Jonathan Butler.
    Among other precious metals, silver was down 0.5
percent at $19.91 an ounce, while platinum edged down 0.1
percent to $1,463.60 an ounce and palladium gained 0.2
percent to $874.93 an ounce.
    Palladium, which hit 13-1/2 year highs last month, is close
to its most expensive level by comparison with platinum since
mid-2002.
    
2:55 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
               SETTLE   CHNG  CHNG                       VOL
US Gold DEC   1310.60   0.10   0.0  1306.80 1319.30   93,590
US Silver SEP  19.905 -0.190  -0.9   19.875  20.155   40,209
US Plat OCT   1472.20   0.60   0.0  1467.30 1477.70    5,102
US Pall SEP    878.00   3.30   0.4   872.90  884.05    6,025

Gold          1309.30   1.46   0.1  1306.00 1317.60         
Silver         19.910 -0.100  -0.5   19.890  20.140
Platinum      1463.60  -1.90  -0.1  1466.60 1473.50
Palladium      874.93   1.43   0.2   873.90  882.50

TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
               CURRENT   30D AVG  250D AVG   CURRENT     CHG
US Gold        106,234   164,905   157,891     14.51   -0.20
US Silver       53,605    45,805    57,826     18.06   -0.02
US Platinum      5,300     8,778    12,447     13.32    0.36
US Palladium     7,342     4,975     5,630     19.26   -0.58

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by David Evans, Jane Baird and David Gregorio and
Marguerita Choy)