adminSINGAPORE. — Gold tracked oil lower yesterday after Russia offered to work with Damascus to put Syria’s chemical weapons under international control, while firmer equities also dented the precious metal’s appeal as an alternative investment.
Bullion, which has slipped nearly 18 percent this year, is also under pressure from expectation that the US Federal Reserve will opt to taper its monetary stimulus programme after the Fed’s open market committee meeting on September 17-18.
Gold fell US$9,05 an ounce to US$1 377,89, well below a record high of about US$1 920 struck in September 2011.
The Fed’s stimulus, known as quantitative easing or QE, has been a key driver in gold’s rally in recent years.
“People are waiting for the next FOMC meeting to see whether they are going to end the QE or reduce buying debts. Sentiment is not that bullish,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
“I think US$1 400 will be capped for the time being. Physical demand is very weak in Hong Kong.”
Premiums for gold bars were little changed from last week at US$2-US$2,50/oz in Hong Kong to spot London prices, reflecting a lack of activity in the physical market.
Spot gold may have completed a rebound from the September 6 low of US$1 362,55/oz and could revisit that low, says Wang Tao, a Reuters market analyst for commodities and energy technicals.
US gold was at US$1 378,50/oz, down US$8,20.
Brent crude futures fell to a one-week low below US$113 a barrel yesterday after Russia’s proposal to avert a possible US strike against Syria reduced gold’s appeal as a hedge against inflation.
Investors shifted some of their money to equities after stocks in Asia hit three-month highs as investors wagered upcoming Chinese data would add to signs the global economy is stabilising.
Tokyo’s Nikkei climbed 1,1 percent, adding to Monday’s 2,5 percent rally as news that Tokyo had won the right to host the 2020 Olympic Games fed optimism about a lasting economic recovery.
A weaker yen and recent gains in the yen-denominated Tokyo gold futures spurred selling in the physical market in Japan. Gold premiums were on par to 25c below the spot London prices.
“We were quoting gold bars at zero premiums last week, but the yen is getting weaker, so the general public is selling gold to us at this moment,” a physical dealer in Tokyo said.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0,23 percent to 917,13 tonnes on Monday from 919,23 tonnes last week. — Reuters.
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