Tags: gold | precious metal | prices | syria

Gold Falls Below $1,400 on Jitters About Syria, US Jobs

Wednesday, 04 Sep 2013 01:09 PM

Gold fell nearly two percent on Wednesday, as investors cashed in ahead of a crucial non-farm report that will give clues on the timing for the Federal Reserve's tapering, and on speculation a U.S. strike on Syria was not imminent.

Spot gold dropped as much as 1.8 percent to a session low of $1,386.20 an ounce earlier and was seen at $1,390.06, still down 1.6 percent, by 1450 GMT.

U.S. gold futures for December fell $23.40 an ounce to $1,388.80.

The metal had risen as much as 1.4 percent on Tuesday after U.S. President Barack Obama won the backing of key lawmakers in his call for limited strikes on Syria to punish its government for its suspected use of chemical weapons.

But on Wednesday Russia said the U.S. Congress had no right to approve the use of force without approval from the U.N. Security Council, while U.S. Senator John McCain, a leading Republican voice on military affairs, said he does not support a Senate panel's draft resolution authorizing the use of force in Syria.

"A U.S. attack on Syria is not a done deal and after the latest announcements investors are just taking profits in gold as well as in oil," VTB Capital analyst Andrey Kryuchenkov said.

The positive correlation between gold and oil has been restored in the past few sessions as gold is seen as a hedge against oil-led inflationary pressures. Brent crude also extended losses on Wednesday, falling below $115 a barrel.

Gold rose to a 3-1/2 month high of $1,433.31 an ounce last week, when a U.S. strike on Syria seemed imminent, before retreating when President Obama decided to seek congressional approval and the British parliament voted against any involvement in the possible strike.

The dollar steadied around an earlier six-week peak, as markets awaited jobs data on Friday, which analysts said would give clues on whether the U.S. Fed will curtail its commodities-friendly stimulus measures as soon as this month. The central bank holds a two-day policy meeting on Sept. 17-18.

A scaling-back would hurt gold prices, which have been boosted by increased central bank liquidity over the past four years.

"Although the Syrian situation seems to be a strong driver at the moment, the U.S Fed tapering is the big focus and quantitative easing has been the most important story for gold since 2008," Natixis analyst Bernard Dahdah said.

"The U.S. non-farm payrolls are an important indicator of the American economy and people are nervous ahead of that."

In South Africa, labor strikes began in gold mines on Tuesday but main union National Union of Mineworkers (NUM) said on Wednesday it had offered to lower its wage increase demands to gold companies, raising hopes of a possible compromise that could limit the duration of the action.

Gold losses also dragged the rest of the complex lower, with spot silver dropping 2.9 percent to $23.48 an ounce.

Spot platinum fell to its lowest since July 7 at $1,489.30 an ounce, while spot palladium fell below $700 an ounce, down 2.5 percent to $698.40 an ounce.

© 2017 Thomson/Reuters. All rights reserved.

 
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Gold fell nearly two percent on Wednesday, as investors cashed in ahead of a crucial non-farm report that will give clues on the timing for the Federal Reserve's tapering, and on speculation a U.S. strike on Syria was not imminent.
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2013-09-04
Wednesday, 04 Sep 2013 01:09 PM
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