Gold Rises From Eight-Month Low on Syria to Physical Purchases

Gold rose from an eight-month low in New York as investors assessed airstrikes in Syria and signs of more physical demand against the outlook for an improving U.S. economy. Silver gained from the lowest price in four years.

The U.S. and its Arab allies launched a barrage of airstrikes against Islamic State positions in Syria, while Israel shot down a Syrian fighter jet. Demand in China and India, the largest buyers, typically increases from September ahead of festive periods and the wedding season. Gold’s drop kept its 14-day relative strength index below 30 for the previous 10 days, signaling to some investors who study charts that prices may be poised to rebound.

Bullion is on course for its first quarterly loss this year, almost wiping out gains in 2014, as the Bloomberg Dollar Spot Index reached a four-year high amid signs the U.S. economy is strengthening. The Federal Reserve raised borrowing-costs projections for 2015 last week, even as it maintained a pledge to keep rates low for a considerable time.

“The metal seems to have been supported by some safe-haven buying after news emerged that the U.S. has launched airstrikes against the ISIS militants in Syria,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report Tuesday. “We do not expect gains in gold to last for long. With broader conditions in the U.S. continuing to improve, we expect the dollar to maintain a firm tone.”

Gold for December delivery added 1.3 percent to $1,233.20 an ounce on the Comex in New York by 7:46 a.m. Prices reached $1,208.80 Monday, the lowest since Jan. 2, and ended 2013 at $1,202.30. Gold for immediate delivery gained 1.4 percent to $1,232.50 in London, according to Bloomberg generic pricing.

Trading Volume

Futures trading volume was 65 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.

In China, volumes for the benchmark spot contract on the Shanghai Gold Exchange Tuesday were at the fourth-highest level since the end of June, the latest data show.

The airstrikes in Syria are a major expansion of President Barack Obama’s effort to destroy the Sunni militant group. Israel shot down a Syrian fighter jet after it infiltrated Israeli air space, the Israeli army said.

“We’re getting a bit of a bounce today but the downward trend hasn’t changed,” said Zhu Siquan, an analyst at GF Futures Co. from Guangzhou, China. “Economic and geopolitical uncertainties still exist but the overall expectation is for an improvement in the U.S.”

Silver for delivery in December rose 0.7 percent to $17.90 an ounce in New York, after reaching $17.325 Monday, the lowest since July 2010. Platinum for October delivery gained 1.3 percent to $1,347.20 an ounce, after touching $1,325.30 Monday, the lowest since Dec. 24. Palladium climbed 1.8 percent to $818 an ounce. It slid to $800.30 Monday, the lowest since May 12.