Gold rises, but equity gains keep pressure

Gold recovered from two-and-a-half month lows yesterday as a reports of a potential ceasefire in eastern Ukraine sowed confusion on the eve of a Nato summit, though strength in stocks kept the metal under pressure.

Prices hit their lowest since mid- June after Ukraine said it had reached agreement with Russian President Vladimir Putin on a “permanent ceasefire” in its eastern Donbass region.

However it later pared losses after the Kremlin denied any actual truce deal, leading Ukraine to clarify that its president had agreed with Putin on steps towards a “ceasefire regime” in Kiev’s conflict with pro- Russian rebels.

Spot gold hit a low of $ 1,261.19 an ounce after the initial report from Ukraine, but had edged back to $ 1,269.26 an ounce by 1127 GMT, up 0.3 per cent. U. S. gold futures for April delivery were up $ 5.20 an ounce at $ 1,270.20.

Spot prices fell 1.7 per cent on Tuesday, their biggest one- day drop since mid- July.

With stock markets rising, the dollar on a generally firmer footing and physical demand soft, the unrest in Ukraine and the Middle East had been a key factor keeping gold prices underpinned over recent months.

“Given there was little physical demand and shrinking investor consumption, geopolitical headlines were supportive with little other reason to keep bullion underpinned and maintain that 1,275/ 80 support last month,” VTB Capital analyst Andrey Kryuchenkov said. “There is little support until $ 1,250,” he added. “Themarket is bearish and we shall see a lot of technical selling now.”