Tags: gold | prices | syria | airstrikes

Gold Rally Fades After US Strikes in Syria Spur Rise

Tuesday, 23 Sep 2014 03:28 PM

Gold rose on Tuesday after the first U.S.-led airstrikes against Islamic State and other militants inside Syria, but early gains evaporated amid a lack of follow-through buying.

The yellow metal's failure to rally further and technical weakness suggested gold prices are vulnerable to losses, analysts said.

Bullion rose as much as 1.6 percent in overnight trade on news the United States and its Arab allies bombed Syria, killing scores of Islamic State fighters and members of a separate al Qaeda-linked group, opening a new front against militants by joining Syria's three-year-old civil war.

"Gold's response was anemic - The market was unable to expand its rally overnight after the U.S. bombing at the ISIS sites in Syria. I think the market is headed for more losses and could fall toward $1,150," said Bill O'Neill, partner at commodities investment firm LOGIC Advisors in New Jersey.

Spot gold was up 0.6 percent at $1,222.31 an ounce by 2:02 p.m. EDT (1802 GMT), having earlier hit a one-week high at $1,234.80.

In just the previous day, bullion fell to its lowest since Jan. 2 at $1,208.36.

U.S. COMEX gold futures for December delivery settled up $4.10 to $1,222 an ounce.

The metal gained support after euro zone data showed business activity was expanding at a slightly weaker pace than expected in September.

Meanwhile, mixed economic data in China also fueled gold's overnight rally. China's manufacturing sector unexpectedly picked up some momentum in September even as factory employment slumped to a 5-1/2-year low, a potential source of worry for the country's Communist leaders who prize social stability.

Technical selling could further pressure gold after spot's 50-day moving average fell below its 200-day moving average, a bearish formation known as a "death cross," for the first time since the end of May.

Investor sentiment remained fragile after gains made throughout the year were wiped out in the past few sessions on prospects of higher U.S. interest rates.

Holdings of SPDR Gold Trust, the top gold-backed exchange-traded fund, fell to their lowest level since December 2008 at 774.65 tonnes on Monday.

Silver rose 0.3 percent to $17.76 an ounce after slipping to a four-year low of $17.30 on Monday.

Platinum was up 0.8 percent to $1,328.74 an ounce, and palladium gained 1.9 percent to $812.47 an ounce.

© 2017 Thomson/Reuters. All rights reserved.

   
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Gold rose on Tuesday after the first U.S.-led airstrikes against Islamic State and other militants inside Syria, but early gains evaporated amid a lack of follow-through buying.
gold, prices, syria, airstrikes
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2014-28-23
Tuesday, 23 Sep 2014 03:28 PM
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