September 11, 2013
Gold prices fell 1.5 percent on Tuesday as the precious metal’s safe-haven appeal retreated after Syria accepted a Russian proposal to give up chemical weapons to win a reprieve from possible US military strikes. While riskier assets such as US equities rallied on the news, gold was pressured as crude oil futures fell 2 percent on easing geopolitical tensions. Encouraging industrial output data from China also boosted economic hopes and weighed on gold.
Bullion fell for a second day as major western powers began working on a United Nations resolution to create a timetable and process for ensuring it happens. On Monday, US President Barack Obama said he saw a possible breakthrough in the crisis, referring to Russia’s proposal.
“A diminishing geopolitical threat may lead gold investors to shift focus away from a receding factor influencing the market to … next week’s FOMC meeting, and the question of the timing and scale of any Fed tapering,” said James Steel, chief precious metals analyst at HSBC.
The US central bank’s Federal Open Market Committee is set to release a policy statement at the end of its two-day meeting next Wednesday. While consensus is building among analysts that the Fed could begin to slash its $85 billion monthly bond purchases as early as September, disappointing US nonfarm payrolls data last week could complicate an otherwise rosy economic outlook.
Spot gold dropped as much as 2.1 percent to a near three-week low of $1,357.34 an ounce earlier. It was last at $1,358.30, down 1.6 percent, by 4 pm EDT (2000 GMT). US gold futures for December delivery settled down $22.70 at $1,364 an ounce, with trading volume about 25 percent below its 30-day average, preliminary Reuters data showed. On August 28, gold rallied to a three-month high above $1,430 on fears Western powers led by the United States would launch missile strikes to punish Syria’s President Bashar al-Assad’s forces for chemical weapons attacks that killed hundreds of civilians on August 21.
“The whole reason gold rallied in the last few weeks has been on the back of the Middle East tension and the rise in the oil price, but that now is going into reverse with the possibility of an agreement,” Societe Generale analyst Robin Bhar said. As a gauge of investor interest, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.23 percent to 917.13 tonnes on Monday from 919.23 tonnes on Friday.
Among other precious metals, silver tracked gold lower, falling to a three-week low of $22.76 an ounce. It was last down 3.1 percent to $22.92. Platinum fell 0.8 percent to $1,468.25 an ounce, while palladium was up 1.4 percent at $692.47 an ounce on bargain hunting after a recent drop on easing supply worries in South Africa. Courtesy Reuters
Published in ZaraiMedia.com