Gold Soars Above $1,300 On Safe Haven Appeal

(RTTNews) - Gold futures snapped a two-day gain to end sharply higher on Wednesday, with investors opting for its safe haven appeal, tracking weak European and Asian equity markets, on concerns over the escalating situation in Ukraine and the Middle East.

Tensions in Ukraine continued to escalate with Russia positioning its troops along the east Ukrainian border, even as the President Vladimir Putin reportedly ordered retaliatory measures against the west for sanctions.

Gold for December delivery, the most actively traded contract, surged $22.90 or 1.8 percent to close at $1,308.20 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for December delivery scaled an intraday high of $1,311.00 and a low of $1,288.50 an ounce.

On Tuesday, gold futures ended lower after recent upbeat U.S. economic data raising prospects of a Fed rate hike sometime sooner than expected.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 800.05 on Wednesday, from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.48 on Wednesday, down from its previous close of 81.53 late Wednesday in North American trade. The dollar scaled a high of 81.72 intraday and a low of 81.41.

The euro traded lower against the dollar at $1.3371 on Wednesday, as compared to its previous close of $1.3376 late Tuesday in North American trade. The euro scaled a high of $1.3386 intraday and a low of $1.3334.

In economic news from the U.S., a report from the Commerce Department showed U.S. trade deficit to have shrunk 7 percent to $41.5 billion in June, due largely to a notable drop in petroleum imports. Economists expected the trade deficit to widen to $45 billion from $44.4 billion in May.

The Italian economy re-entered recession as the gross domestic product contracted for the second consecutive time during the three months to June, preliminary estimates from the statistical office Istat showed Wednesday. Italy's gross domestic product fell unexpectedly by 0.2 percent sequentially in the second quarter, the fastest decline in a year. Economists expected the economy to expand 0.1 percent.

Italy's GDP expanded only in one quarter since the second quarter of 2011. Year-on-year, GDP decreased 0.3 percent with economists anticipating a growth of 0.1 percent for the second quarter.

British industrial production rebounded less-than-expected in June, with industrial and manufacturing output rising 0.3 percent each in June, the Office for National Statistics said Wednesday. Economists expected industrial production and manufacturing output to rise 0.6 percent.

Meanwhile, German factory orders declined unexpectedly by an adjusted 3.2 percent in June from May, when it fell by a revised 1.6 percent, Destatis reported Wednesday. Economists had forecast a 0.9 percent increase for June. The decline was the biggest since September 2011, when orders plunged by 3.4 percent.

Traders are also gearing up for Thursday's policy statement from the European Central Bank, looking for indication about further stimulus to revive the sagging eurozone economy.