Gold hits three-week low

September 12, 2013

Gold Price
Gold Price

Gold hit a three-week low on Wednesday, under pressure as speculation that a US military strike against Syria could be averted dented the metal’s safe-haven appeal. US President Barack Obama vowed on Tuesday to explore an initiative from Russia to neutralise Syria’s chemical weapons, but he voiced scepticism and still sought support for his threat to use military force should diplomacy fail.

Spot gold fell earlier to its lowest since August 22 at $1,356.85 an ounce. It traded down 0.1 percent at $1,361.86 by 1323 GMT, after losses of 1.6 percent in the previous session. US gold futures for December delivery edged down $1.80 an ounce to $1,362.40. Analysts said Syria would probably now be less of a focus for the market as the US Federal Reserve meeting on September 17-18 takes centre stage.

“The uncertainty around the timing and pace of the Fed tapering is currently putting pressure on gold prices and will continue to do so until the central bank disclose that information at its meeting next week,” T-Commodity metal consultant Gianclaudio Torlizzi said. “The fact that the Syrian situation is all back to a diplomatic solution is something that is not really supporting gold or crude oil right now and the moves lower seen in the past sessions were merely due to that,” Danske Bank analyst Christin Tuxen said The positive correlation between gold and oil has been restored over the past month after political tensions heightened and a US-led strike on Syria seemed imminent. Gold is seen as a hedge against oil-led inflationary pressures.

The physical market has yet to pick up in Asia and other regions even though gold has fallen below the psychologically key level of $1,400 an ounce. Dealers said sales of scrap subsided in Singapore, keeping premiums for gold bars unchanged at $1 to $1.50 an ounce to spot London prices. In top consumer India, a sharply lower rupee curbed buying interest despite an approaching festival.

Indian gold demand typically picks up between August and October, when consumers buy bullion to celebrate festivals, peaking with Diwali, which falls in November this year. Spot silver, which fell to a three-week low of $22.75 an ounce earlier, was trading up 0.7 percent at $23.09. It lost around 3 percent on Tuesday. Spot platinum rose 0.5 percent to $1,474.50 an ounce, while spot palladium gained 0.9 percent at $697.78 an ounce. Courtesy Reuters

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