Gold up as Ukraine tensions saps risk appetite, palladium rises

LONDON, April 14. - Gold jumped to a three-weekhigh on Monday as mounting tensions in Ukraine curbed investorappetite for risk, sending equities lower and boosting bullion''sappeal as an insurance asset. Palladium hit a fresh high since August 2011 at $814.20 anounce on growing fears that supply would suffer from fresh U.S.sanctions on top producer Russia and prolonged labour strikes inNo. 2 miner South Africa. Ukraine gave pro-Russian separatists a Monday morningdeadline to disarm or face a "full-scale anti-terroristoperation" by its armed forces, while the UN''s Security Councilheld an emergency session on Sunday night to discuss the crisis. Spot gold rose 0.5 percent to $1,324.90 an ounce at0944 GMT, while gold futures for June delivery were upby the same margin to $1,325.20 an ounce. "You have tensions between Russia and the West over Ukraineagain which is giving support to gold, although the strengthcoming from expectations interest rates in the U.S. will staylow for a prolonged period is a more dominant driver overall,"ABN Amro analyst Georgette Boele said. "But as the U.S. data continues to improve, there could be areadjustment in interest rate expectations and that''s when goldis going to suffer," she added. "As for the geopoliticalsituation, it is much harder to predict how things can go but Idon''t expect a full-blown crisis there and prices shouldn''t gobeyond the $1,391 level hit in mid-March." Gold has built up support over the past week after the Fed''sMarch meeting minutes showed officials were not keen onincreasing interest rates straight after unwinding bondpurchases, as the markets had feared. But an improvement in U.S. economic reports left investorsstill unconvinced that the rally in gold could continue,analysts said. "...We continue to stand by our year-end gold price targetof $1,050 an ounce," Goldman Sachs said in a note. "Morebroadly, we believe that with tapering of the Fed''s QE, U.S.economic releases are back to being a key driving force behindgold prices." Implying underlying investor bearishness and pessimism overthe longer-term outlook, outflows continued from SPDR Gold Trust, the world''s largest gold-backed exchange-traded fund. Holdings in the fund fell 1.80 tonnes to 804.42 tonnes onFriday. Buying in the physical markets was still thin with Chineseprices trading at a discount to spot gold.

PALLADIUM AT NEAR-3-YEAR HIGHS Palladium was up 1 percent at $808 an ounce, oncourse for its fifth session of gains. Relations between Russia and the West are at their worstsince the Cold War, after Moscow annexed Crimea from Ukraine,saying the Russian population there was under threat. The United States is prepared to step up sanctions againstMoscow if pro-Russian military actions in eastern Ukrainecontinue, a senior U.S. envoy said, with the sanctions set totarget mining, banking and energy, among other sectors.[ID:nL2N0N50AK Palladium has outperformed other precious metals this year,gaining about 14 percent also supported by fears of supply,growing demand in the auto sector and buying from twonewly-launched exchange-traded funds (ETFs) in Johannesburg. Platinum gained about 1 percent to its highest innearly a month at $1,464.40 as labour strikes continued in SouthAfrica. Silver was down 0.4 percent to $19.87 an ounce.