Gold simmers as Ukraine crisis cools

Rumours of a looming Russian-Ukrainian war added close to $30 to the gold price over the past couple of days as safe-haven buying flooded the market.

At the peak of the Ukraine crisis on Monday, gold was trading at a spot price of nearly $1,355 per ounce.

But as the situation in eastern Europe appeared to cool, so did bullion. The precious metal shed much of its gains by Tuesday afternoon, trading for a spot price of about $1,338 per ounce.

Gold price March 4, 2014

The situation is far from resolved: Though Russian President Vladimir Putin ordered his troops back to bases, brushing off his recent actions as 'combat readiness drills,' tensions are flaring in Ukraine's Crimea region.

"Because the conflict looks like it could well last some time, gold should be well able to defend its current price level, and even gain further ground again in the short term," Eugen Weinberg, head of commodities research at Commerzbank told Reuters on Tuesday.

John Brady, managing director of interest rate products at R.J. O’Brien & Associates told Bloomberg on Monday that gold could challenge $1,400 "in the not so distant future" as unseasonably cold weather dampens economic data, adding to the effects of eastern European uncertainty.

Meanwhile, Mark Keenan, Head of Commodities Research – Asia, Societe Generale, told CNBC that though he's bearish in the long-term he sees the yellow metal hitting the $1,400 mark in the near term.

Other factors affecting the gold price recently are the lack of a rise in interest rates and rising physical demand,Thomas Vitiello, a partner at Aurum Options Strategies, told The Street on Tuesday.

Image featured on homepage: Canadian Minister of Foreign Affairs meets Ukrainian Prime Minister Arseniy Yatsenyuk | Photo by DFATD