Gold Futures Ease As U.S. Dollar Extends Gains
Gold futures fell Thursday, with a gain in the U.S. dollar on Syria-related concerns tugging at prices after they climbed to their best levels in nearly three months.
Gold for December delivery declined $9.20, or 0.7%, to $1,409.70 an ounce in electronic trading.
The move followed a rise in the U.S. dollar against key rivals, extending gains from Wednesday as investors awaited word on possible U.S.-led military action against Syria, which the White House said used chemical weapons in an attack near Damascus last week. Syria has denied the accusation.
If the dollar strengthens, dollar-denominated commodities such as gold become more expensive for holders of other currencies to purchase, which can in turn depress futures prices.
Gold on Wednesday slipped 0.1% on the Comex division of the New York Mercantile Exchange, but it had bounced up to as high as $1,434 an ounce in electronic trade.
Standard Bank ascribed the early Wednesday surge in gold “to higher crude-oil prices and the accompanying geopolitical risk surrounding Syria. We expect market participants to be reluctant to initiate new shorts in an environment where geopolitical risk could rise further,” according to the bank’s head of commodity strategy Walter de Wet.
Nymex oil futures hit more than $112 a barrel on Wednesday as tensions over Syria fed supply concerns in the Middle East. Crude oil for October delivery ended Wednesday’s session up 1% at $110.10 a barrel.
Gold futures on Monday briefly rose above $1,400 an ounce after a weaker-than-expected report on U.S. durable-goods orders. Softer data may lead the Federal Reserve to delay plans to reduce its monetary stimulus, and stimulus efforts have been cited among the factors that fueled a rally in gold prices in recent years.
Geopolitical tensions may also lead the Fed hold off the reduction in stimulus, some analysts have said. The Fed’s $85 billion worth of bond buying per month has been aimed at spurring economic growth.
Investors will receive more economic data Thursday, including the second reading of U.S. gross domestic product and weekly claims for unemployment benefits. Analysts polled by MarketWatch expect the GDP result to be revised to as high as 2.3%, from an initial reading of 1.7%.
Gold this week also marked a return to a bull market, as prices had risen at least 20% from intraday lows hit by Comex gold futures in late June. Short-covering in gold futures and a swing back to inflows to gold exchange-traded funds have helped prod prices higher.
But the recent slide in the Indian rupee against the greenback “will almost certainly raise fresh doubts about Indian gold demand going into the wedding season, especially now that the impact of a weaker currency is being magnified by sharply higher gold prices,” said INTL FCStone metals analyst Edward Meir in a note Tuesday.
The rupee has plunged against the dollar as a rise in U.S. yields has hurt India and other countries with current-account deficits.
In electronic trade Thursday, September silver fell for a second session, down by 24 cents, or 1%, to $24.16 an ounce, further cutting into its nearly 3% rally on Tuesday.
September copper held at $3.30 a pound, while October platinum dropped $10.90, or 0.7%, to $1,529.20 an ounce.
September palladium fell $5.05, or 0.7%, to $741 an ounce.
Source : Marketwatch
