By A. Ananthalakshmi
SINGAPORE, March 13 (Reuters) - Gold extended gains to a
third session on Thursday, scaling fresh six-month highs as
investors sought to hedge their bets against geopolitical
tensions in Ukraine and economic slowdown fears in China.
Gold is seen as a safe-haven asset during times of economic
and political uncertainty, when the metal is preferred by
investors over riskier assets such as equities. It has gained 14
percent so far this year on the global uncertainties.
A recent bond default in China and a weak exports report
sent equities and base metals lower. More data on Thursday
showed China's economy slowed markedly in the first two months
of the year, with growth in investment, retail sales and factory
output all falling to multi-year lows.
Spot gold rose 0.4 percent to $1,371.76 an ounce by
0737 GMT, after jumping 1.3 percent on Wednesday. The metal
earlier on Thursday hit $1,374.85, its highest since Sept. 10.
Technical buying has also been supportive of price momentum
in the last two sessions, especially after prices cleared a
recent high near $1,355 an ounce.
"Given bullion's technical break, it may be at risk of
profit-taking in the near term, barring an escalation of Eastern
European tensions," HSBC analysts said in a note.
"Geopolitical events can have a pronounced, but sometimes
short-lived impact on gold."
Reuters technicals analyst Wang Tao said spot gold faces
resistance at $1,375-$1,377, a break above which will open the
way towards $1,433.31, the Aug. 28 high.
The biggest factor driving gold prices at the moment is the
stand-off between the West and Russia over Ukraine.
The EU agreed on a framework on Wednesday for its first
sanctions on Russia since the Cold War, a stronger response to
the Ukraine crisis than many expected and a mark of solidarity
with Washington in the drive to make Moscow pay for seizing
New money has been flowing into gold-backed exchange traded
funds in recent weeks, in a sign of investor confidence, after
record outflows last year.
However, holdings in SPDR Gold Trust, the world's
largest gold-backed exchange-traded fund, fell 1.50 tonnes to
811.20 tonnes on Wednesday - the first decline since Feb. 19.
Physical demand has been subdued due to the price rally,
with prices in China - the biggest bullion consumer - trading at
a discount to spot prices.
PRICES AT 0737 GMT
Metal Last Change Pct chg
Spot gold 1371.76 5.18 0.38
Spot silver 21.31 0.07 0.33
Spot platinum 1467.75 1.95 0.13
Spot palladium 771.8 2.4 0.31
Comex gold 1372.5 2 0.15
Comex silver 21.345 -0.013 -0.06
COMEX gold and silver contracts show the most
(Editing by Michael Perry and Muralikumar Anantharaman)