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LONDON. — Gold fell to a five-week low on Friday, heading for its worst week in more than two months on prospects the United States would soon curb its stimulus and as fears of a US-led military attack on Syria receded. The United States and Russia started talks on Thursday, trying to flesh out a Moscow plan to dispose of Syrian president Bashar al-Assad’s chemical weapons.
Gold hit its weakest since August 8, at US$1 304,56 earlier on Friday, and is on track to record its biggest weekly drop since June 21, at 5,3 percent so far.
It was quoted at US$1 317,30 an ounce, down 0,2 percent. As technical support at 100- and 50-day moving averages has been broken, traders said US$1 307 should now provide a floor, but a consistent fall through that level would trigger further losses to August’s lows of US$1 273.
US gold futures for December also touched their lowest since August 9 at US$1 304,60 an ounce and stood at US$1 317,14, still down $13.20.
“Gold’s drop at the beginning of the week was mostly due to the waning safe-haven buying after the diplomatic action in Syria,” said MKS SA senior vice president Bernard Sin.
“But now it’s all about the Fed tapering talks and expectations that the central bank will start, albeit slowly, as soon as this month,” he said.
The US Federal Reserve may announce a cut in its US$85 billion monthly bond purchases at the end of its two-day meeting on Wednesday.
Gold lost 19 percent this year after the Fed signalled it would start reining in nearly five years of quantitative easing that weighed the dollar down and encouraged investors to buy hard and non-interest rate bearing assets like gold.
The yellow metal came under further pressure in earlier trading from a firmer dollar after a Japanese newspaper report that Lawrence Summers would soon be named to head the Federal Reserve.
It cut some losses, however, after weaker-than-expected US economic data indicating slow economic growth in the third quarter suggested that the Fed could only slowly start its tapering, analysts said.
“If the Fed defers the decision on tapering we could well see gold take back some of the ground that has lost in the last few days,” said Mitsubishi analyst Jonathan Butler.
Gold prices rallied above US$1 430 an ounce to a three-and-a-half-month high in late August on safe-haven buying, as the United States and its allies looked set to launch military strikes on Syria.
But the metal’s appeal has been dented by diplomatic efforts to place Syria’s chemical weapons under international control, which may avert a US military strike.
Physical dealers reported buying interest from jewellers, which could help gold stay above the psychological level of US$1 300.
In other precious metals, spot silver, which fell to a one-month low of US$21,35 an ounce earlier, was trading up 0,6 percent at US$21,83. It has lost around 10 percent this week, its biggest weekly loss since mid-April.
Spot platinum rose 0,4 percent to US$1 432,49 an ounce, while spot palladium gained 1 percent at US$696,47 an ounce. — Reuters.
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