The gold price recovered from a four-week low as G7 leaders threatened further sanctions against Russia over its annexing of Crimea.
Gold rebounded from the lowest price in more than four weeks as the world's leading industrial powers threatened further sanctions to deter Russia from invading other parts of Ukraine, boosting demand for a haven.
Bullion for immediate delivery advanced as much as 0.6% to $1 316.86 an ounce and was at $1 314.61 at 2.01pm in Singapore. Prices dropped to $1 308.06 on Monday, the lowest since February 20, on expectations that interest rates will increase as the US recovers. Gold for June delivery rose by 0.3% to $1 315 an ounce on the Comex in New York.
Meeting for the first time since last week's annexation of Crimea by Russia, G7 leaders said they won't attend the planned G8 meeting that had been set for Sochi, and will instead hold their own summit in June in Brussels. Gold rose by 9% this year on signs of a faltering global economy and the most serious confrontation between Moscow and the US and its allies since the demise of the Soviet Union.
"I can't see any other direction for gold other than going higher because this situation isn't going to resolve itself anytime soon," said Gavin Wendt, the founder and senior resource analyst at Mine Life in Sydney. "It's not going to get resolved and it could spread to other parts of Ukraine."
Holdings in the SPDR Gold Trust, the world's biggest bullion-backed exchange-traded product, increased by 0.6% to 821.47 tonnes on Monday, the highest since December 13, according to data from the fund's website.
"We remain ready to intensify actions, including co-ordinated sectoral sanctions," said the G7. US President Barack Obama told reporters on Monday that there's agreement to impose a cost on Russia for its actions.
Silver for immediate delivery was up by 0.5% to $20.05 an ounce after earlier dropping to $19.88, the lowest level since February 7. The price fell by 1.9% on Monday.
Palladium was at $794.65 an ounce from $794.90 on Monday when the metal increased to $801.53, the highest level since August 2011, on concerns that supplies from Russia may be disrupted. Platinum rose by 0.2% to $1 431.72 an ounce. – Bloomberg