Gold Treads Water, Awaiting Syria Developments

Gold futures moved sideways in electronic trade Wednesday, as the market kept watch on the Syrian situation, while silver handed back some of its monster gain in the previous session.

Gold for December delivery  edged marginally higher, adding 40 cents to trade at $1,412.40 an ounce after rising 1.1% Tuesday on the Comex division of the New York Mercantile Exchange.

“Gold prices are trading little changed this morning on profit-booking following substantial gains yesterday,” analysts at ICICI Bank wrote Wednesday.

“Meanwhile, holdings in SPDR Gold Trust  fell to 919.23 tonnes from 921.03 tonnes, which weighed on the metal prices,” they wrote.

The Syrian conflict remained a key focus for the market, with reports late Tuesday saying the U.S. Senate Foreign Relations Committee had reached a deal on a bill to approve military action against the Syrian regime.

The likelihood of a U.S. strike on Syria appeared to grow Tuesday after House Speaker John Boehner said he would support President Barack Obama’s request to authorize a military strike.

The accord between the Republican Boehner and the Democratic White House suggested Congress may approve an attack on Syria, a move some analysts had doubted earlier in the week.

But HSBC analysts said that while “the potential for Mideast tensions to intensify would be bullish for bullion,” the gains would depend on a concurrent rise in oil prices.

“A key reason for gold to rally in response to Mideast tensions is the potential for oil-supply disruptions that a U.S. strike or an escalation of the conflict may trigger,” they wrote late Tuesday.

“In order for gold to build on recent gains over $1,400/ounce, oil prices also have to remain strong, we believe. A relaxation in oil prices — for whatever reason — could also undermine gold,” they said.

Silver gives back

While gold moved sideways Wednesday, December silver  fell 43 cents, or 1.8%, to $24 an ounce.

The difference in two metals’ actions reflected their trading in the previous day’s Comex session, when gold had risen 1.1% but silver had jumped 3.9%, or 92 cents.

BullionVault’s Perez-Santalla on Tuesday cited strong sales of U.S. Silver Eagle coins as helping propel the metal.

In other futures trade, October platinum  lost $2.70, or 0.2%, to $1,535.50 an ounce, while December palladium  rose 85 cents, or 0.1%, to $718.80 an ounce.

December copper  gave up 2 cents, or 0.5%, to $3.29 a pound

Source : Marketwatch