Gold Swings as Investors Weigh Tapering Outlook, Syrian Tension

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Gold swung between gains and losses as better-than-expected U.S. data backed the case for the Federal Reserve to cut stimulus, while the U.S. may proceed with a strike against Syria even after U.K. lawmakers rejected action.

Bullion for immediate delivery gained and lost as least 0.3 percent, before trading 0.1 percent higher at $1,409.74 an ounce at 11:56 a.m. in Singapore. Prices are heading for a second monthly advance in the best run since September. Gold for December delivery dropped 0.3 percent to $1,409.40 an ounce on the Comex, paring a fourth weekly gain.

U.S. gross domestic product grew 2.5 percent in the second quarter, up from an earlier estimate of 1.7 percent, a Commerce Department report showed. U.S. President Barack Obama is still prepared to proceed with a limited military strike on Syria even without U.K. support or an endorsement from the Security Council, the New York Times said, citing unidentified administration officials. Gold rallied on Aug. 28 to the highest level since May as the prospect of action against Syria boosted haven demand.

“The GDP numbers came out a bit better than what was expected,” said Alexandra Knight, an economist at National Australia Bank Ltd. “People might still see a strike as potentially still happening.”

Gold tumbled 16 percent this year on expectations that the Fed will slow the $85 billion in monthly debt purchases as the world’s largest economy improves. Officials will cut the amount at their next meeting on Sept. 17-18, according to 65 percent of economists in an Aug. 9-13 Bloomberg survey.

Conference Call

U.K. Prime Minister David Cameron yesterday lost a parliamentary vote sanctioning action against Syria, ruling out British participation in an attack. Senior administration officials held a conference call with House and Senate leaders to offer details on Syria’s alleged use of chemical weapons near Damascus, according to a statement from the White House.

Investors should sell gold on a rally toward the 200-day moving average at about $1,500 an ounce, Mitul Kotecha, head of global markets research Asia and global head of foreign exchange strategy at Credit Agricole SA, said in a presentation today. Higher bond yields and a stronger dollar will contribute in large part to expected further price declines, it said.

Gold may benefit in the short term from “Syrian tensions but the overall trajectory is downwards,” Kotecha said in the presentation, also citing Indian festival buying as a factor that may support prices in the near term. The bank forecasts an average price of $1,315 this year and $1,094 in 2014.

Silver for immediate delivery gained 0.3 percent to $23.95 an ounce, paring a weekly loss. Prices are still set to climb 21 percent this month, the most since April 2011.

Platinum declined as much as 0.5 percent to $1,512.90 an ounce, the lowest since Aug. 22, and was at $1,518.75. While the metal is heading set for the first weekly loss in eight, prices are poised for a second monthly gain.

Palladium fell as much as 0.3 percent to $734.47 an ounce, the lowest since Aug. 14, before trading little changed at $737.83. The metal is heading for a second weekly loss, trimming a monthly advance.

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