Gold Plunges To End Below $1,300 On Ukraine

(RTTNews) - Gold futures slipped sharply for a second straight session to end at a near one-week low Wednesday, as investors focused on news of fresh talks between Russia and Ukraine to resolve the deadly conflict in eastern Ukraine. The developments come amid some heavy fighting between government forces and pro-Russia militia in eastern Ukraine, with reports of more casualties on both sides.

Investors also focused on Federal Reserve Chair, Janet Yellen's testimony, who said the U.S. economy was picking up after a winter lull brought on by unusually bad weather across much of the country. She indicated the labor market as "far from satisfactory," despite unemployment rate falling to 6.3 percent in April.

The slack labor market and low inflation will keep interest rates near zero, even as the broader economy gradually improves, Yellen told the Congress Wednesday morning.

Gold for June delivery, the most actively traded contract, plummeted $19.70 or 1.5 percent to close at $1,288.90 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for June delivery scaled an intraday high of $1,315.00 and a low of $1,286.60 an ounce.

Yesterday, gold ended a shade lower with investors seeking the safe haven appeal of the precious metal, with the developments in Ukraine in focus.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 782.85 tons on Wednesday from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.21 on Wednesday, up from its previous close of 79.14 late Tuesday in North American trade. The dollar scaled a high of 79.24 intraday and a low of 79.09.

The euro traded lower against the dollar at $1.3916 on Wednesday, as compared to its previous close of $1.3927 late Tuesday in North America. The euro scaled a high of $1.3940 intraday and a low of $1.3912.

In economic news from the U.S., the Labor Department said productivity dropped at an annual rate of 1.7 percent in the first quarter amid disruptions caused at U.S. workplaces by harsh winter weather. The consensus estimate called for a 1.2 percent quarter-over-quarter drop in productivity. The report showed unit labor costs to have jumped by 4.2 percent in the first quarter, the biggest increase in five quarters. Unit labor costs were expected to rise 2.8 percent.

In her testimony to the Joint Economic Committee in Washington, the Federal Reserve Chief Janet Yellen said that high a degree of monetary accommodation remains warranted due to slackness in labor markets and the continuation of inflation below the Fed's 2 percent objective.

Meanwhile, China's service sector growth eased from the prior month and remained weak in April, whereas manufacturing activity contracted for the fourth month, driving overall private sector activity further into negative zone. The headline HSBC services Purchasing Managers' Index dropped to 51.4 in April from 51.9 in March, results of a survey by Markit Economics showed Wednesday.

German factory orders declined 2.8 percent month-on-month in March, reversing the revised 0.9 percent rise posted in February, Destatis reported. Economists had forecast a 0.3 percent rise for March.