Gold Spot Price: Dipping below $1,400
NEW YORK (Aug 30) Gold today slid below $1,400 an ounce on speculation that a U.S. military strike on Syria is less likely and renewed concerns that the Fed might start tapering stimulus as early as next month supported by strong US economic data. Additional pressure on the gold price came from a firmer dollar, which was boosted by data showing that the pace of business activity in the US Midwest rose to 53.0 from 52.3 last month, matching analysts’ expectations. Still, the precious metal is on track for a second monthly gain in a row.
Military strike against Syria less likely
US officials conceded on Thursday they lacked conclusive evidence that a gas attack against civilians in Syria last week was personally ordered by the country’s President Bashar al-Assad. Meanwhile, the UK parliament said no to a British involvement in a possible US-led military strike against the Middle Eastern country. These recent developments make a military action against Syria less likely. The possibility of a strike prompted safe haven demand for gold earlier this week, lifting the gold price to its highest level since May 14.
"Gold is under pressure from a firm U.S. dollar and lower oil prices after the West debates whether to attack Syria," Commerzbank analyst Eugen Weinberg said, as quoted by Reuters.
"The move higher in August was driven mostly by short-covering and opportunistic buying, which seems to have now run out of steam," VTB Capital analyst Andrey Kryuchenkov said, as quoted by the newswire.
The gold price could be found at $1,395.78 as of 15:57 BST, down about one percent from yesterday’s closing level.
QE tapering
Bullion suffered another blow by US economic data released Thursday, which showed that the US economy had continued to improve. The country’s gross domestic product expanded 2.5 percent in the second quarter, up from an earlier estimate of 1.7 percent, while jobless claims fell to 331,000 in the past week from 337,000 a week earlier.
This data supports expectations that the US central bank could soon start tapering its stimulus programme known as quantitative easing. Gold price has significantly benefited from the Fed’s ultra-loose monetary policy and an early end to the programme is likely to hurt the price. The US central bank is currently buying $85 billion worth of debt on a monthly basis.
Higher gold prices in seasonally weak August deterred buyers who had splashed out on jewellery, bars and coins earlier this year.
