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Gold edges higher after recent fall

Last updated: 01:01 26 Mar 2014 AEDT, First published: 02:01 26 Mar 2014 AEDT

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Gold rallied after the sharp declines of recent days but the market remained edgy despite the deepening Ukraine crisis.

The G8 group of developed countries has now become the G7 again after Russia was shown the door following its annexing of Crimea.

A planned June summit in Sochi has also been scrapped with the threat of a further ratcheting up of the measures being taken against Russia if there is any further incursion into Ukraine.

Russia has been massing troops on the border of eastern Ukraine, where like Crimea, there are many Russian–speakers who look to Moscow rather than Kiev.

Spot gold was trading US$5 higher at US$1,314 with silver a touch higher at US$20.1 while platinum was flat at US$1,427. 

Traders said disappointing economic data coming out of China may provide some support especially if it means it also adopts stimulus measures to boost its economy.

Demand from institutions has held up and even though the gold price has weakened there has been an inflow into exchange traded funds over the past two days.

Bloomberg reported more than 7 tons has now flowed back into ETFs since the start of 2014, compared to the huge wave of withdrawals that sunk the gold price in 2013.

Holdings of SPDR Trust, largest of the gold-backed ETFs, were at their highest this year on Monday for example.

Gold was hit last week by comments from new Fed chair Janet Yellen that US interest rates might rise six months earlier than the market had been forecasting.

The price has been boosted since 2008 by the loose money policies of the Fed, which cut interest rates to almost zero reducing the opportunity cost of holding the metal.

Major movers

Randgold Resources up 80p at 4,707p

Fresnillo up 19p at 871p

Anglo American up 48p at 1,489p

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