The U.S. Comex gold (COMEX:GCJ14) futures rallied 0.64% in the past two days to $1,346.70 on March 11. This year, the gold futures have risen 12% compared to 1.47% (including dividends) for the S&P 500 Index (CME:ESM14) and -0.24% for the Euro Stoxx 50 Index. This week, the S&P 500 Index declined 0.54% while the Euro Stoxx 50 Index was pretty much flat. The U.S. Dollar Index (NYBOT:DXH14) has been trading below 80 in the past four days. The CRB Commodities Index retreated 0.73% this week with copper, which has plunged over 8% since March 6, leading the decline.

China and Ukraine
China reported a much weaker than expected February year-on-year exports growth of minus 18.1% and an inflation rate of two percent, a 13-month low. In fact, China’s share of U.S. imports has flattened out while that with the EU has declined by two percentage points since the peak in 2010. The M2 growth, however, grew slightly faster than expected at 13.3% in February. An expected referendum on 16 March in Crimea on the union with Russia has raised the probability of lawlessness in Ukraine and more sanctions by Europe. In the U.S., the February non-farm payrolls rose by 175,000 compared to 129,000 in January. January job openings also increased to 3.974 million from 3.914 million in December.

Investors’ Positioning
According to the CFTC, the speculators’ net combined gold positions have risen to 118,241 contracts, the most bullish since December 2012, led by a 15% contraction in the short combined positions. The gold-backed ETP holdings have risen from this year’s low of 1,737 metric tons on 7 February to 1,762.5 metric tons on 10 March, back to the level as of year-end. While the Ukrainian crisis has attracted safe haven bids for gold, Barclays warned that should the geopolitical risks fade, and given the effect of the stronger U.S. employment report recently, the gold prices could become vulnerable to a rebound in the U.S. Dollar.