SINGAPORE, Sept 2: Gold extended losses to a third session on Monday, falling over 1 percent in early Asian
hours as U.S. President Barack Obama chose to seek Congressional
approval before initiating any military action against Syria.
Spot gold had dropped to a one-week low of $1,379.44 before paring some losses to trade down 0.5 percent at $1,388.24
an ounce by 0240 GMT. U.S. Gold also fell about 1 percent, while silver eased half a percent.
Gold had risen last week to its highest since mid-May as possible military action against Syria prompted safe-haven buying, but gave up some gains after British lawmakers voted against any involvement.
‘The easing tensions in Syria have caused gold prices to dip,’ said Barnabas Gan, an analyst at OCBC Bank in Singapore.
‘Our base case scenario is that the Syrian issue will not blow up. We are still bearish on gold,’ said Gan, who expects prices for the metal to fall to $1,250 by year end.
Obama stepped back from the brink over the weekend and delayed an imminent military strike against Syria to seek approval from the U.S. Congress in a gamble that will test his
ability to project American strength abroad and deploy his own
power at home.
Before Obama put on the brakes, the path had been cleared for a U.S. Assault. Navy ships were in place and awaiting orders
to launch missiles, and U.N. Inspectors had left Syria after gathering evidence of a chemical weapons attack that U.S. officials say killed 1,429 people.
Gold has gained about $200 an ounce from its June low of $1,180.71 largely on short covering and technical buying, although it is still down about 17 percent for the year.
But with the drop below $1,400 on Friday, analysts expect further dips. Spot gold may pause around support at $1,376 per
ounce, according to Reuters technicals analyst Wang Tao.
FED TAPERING
September is a key month for gold as many economists expect
the U.S. Federal Reserve to begin tapering its commodity-friendly stimulus measures this month. The Fed is expected to commence a two-day policy meeting on Sept. 17.
A scale-back would hurt prices as easy central bank money pushed gold to an all-time high of about $1,900 in 2011.
Recent economic data from the United States has disappointed, indicating that the third quarter has not gotten
off to a great start.
‘(Economic) indicators are still looking good, though not as
favourable as we had hoped for,’ said OCBC’s Gan.
He expects gold prices to drop to $1,250 by year-end if tapering begins this year, and $1,350 if it gets pushed to 2014.
Precious metals prices 0240 GMT
Metal Last Change Pct chg YTD pct chg
Volume
Spot Gold 1388.24 -7.45 -0.53 -17.10
Spot Silver 23.78 0.32 +1.36 -21.47
Spot Platinum 1521.99 6.49 +0.43 -0.85
Spot Palladium 723.72 4.72 +0.66 4.58
COMEX GOLD DEC3 1389.00 -7.10 -0.51 -17.11 8573
COMEX SILVER DEC3 23.83 0.31 +1.33 -21.39 6878
Euro/Dollar 1.3201
Dollar/Yen 98.49
COMEX gold and silver contracts show the most active months (agencies)
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