Gold shot higher to hit its highest for almost six months as Ukraine and fears over the banking sector in China prompted more investors to take out some insurance.
Spot gold jumped US$18 to US$1,366, a level it last visited in September.
Analysts warn that if the tension in Ukraine eases gold might be vulnerable, but that prospect looked distant today with the vote on Crimea’s secession from the country at the weekend and diplomatic efforts at finding a solution stalled.
Reports from Russia also suggested it is prepared to annexe Crimea after the vote, while Western military activity is being stepped up slightly with reconnaissance planes dispatched to monitor Russian troop movements around Ukraine’s borders.
Worries about China were also boosting demand for gold amid reports of another corporate bond in trouble, while the copper price tumbled overnight. Copper is frequently used as collateral for lending in China.
The political uncertainty has outweighed speculation over the US Federal Reserve’s next move. The US central bank holds an interest rate meeting next week, 18-19 March, and another US$10bn cut to the monthly bond buying programme is widely expected.
Last year, gold turned down sharply after a decent start to the year and with the impact of the bitter winter fading in the US this will be an important month to gauge the underlying situation of US economy and also the demand for gold.
Silver rose slightly to US$1,365, while platinum was US$9 higher at US$1,469.
Major movers
Randgold Resources up 90p at 4,960p
Fresnillo up 12p at 894p
Anglo American down 11p at 1,424p