Gold holds gains on Ukraine tensions but fund outflows continue

Written by Reuters | Singapore | Updated: May 5 2014, 11:53am hrs
Gold was trading near a one-week high on Monday, retaining sharp gains from the previous session, as heightened tensions and violence in Ukraine burnished the metal's safe-haven appeal.

However, further outflows from the top gold fund indicated that the gains could be short-lived.


Spot gold was flat at $1,300.33 an ounce by 0032 GMT, after gaining 1.3 percent on Friday.

Pro-Russian militants stormed a Ukrainian police station in Odessa on Sunday and freed nearly 70 fellow activists as the country's leaders lamented a police force they said was widely undermined by graft or collaboration with separatists.

Militants smashed windows and broke down the gate at the compound two days after over 40 pro-Russian activists died in a blaze at a building they had occupied after clashes with pro-Kiev groups.

Gold's reaction to Friday's U.S. jobs data was mixed. Employers hired workers at the fastest clip in more than two years in April. However, there was a sharp increase in the number of people dropping out of the labour force, which pushed the unemployment rate to a 5-1/2-year low of 6.3 percent.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 2.70 tonnes to 782.85 tonnes on Friday - its third straight session of losses. Last week alone, the fund saw nearly 10 tonnes in outflows.

Hedge funds and money managers cut their bullish bets in gold futures and options, as expectations of a stimulus cut by the Federal Reserve dented the metal's appeal as a hedge, data from the Commodity Futures Trading Commission showed on Friday.

Rescue workers had pulled 10 bodies from the rubble of a collapsed illegal gold mine in Colombia by Saturday, the government said, three days after it caved in, and six are still believed to be buried under tonnes of mud and gravel.