Gold falls after 5-day rise as Syria attack fears ease
LONDON (Aug 29) Gold fell about 1 percent on Thursday, snapping a five-day rally on fading fears that U.S.-led forces would soon launch a military strike on Syria, as investors turned attention to strong U.S. economic growth and the Federal Reserve's plans to rein in its bond buying. President Barack Obama told Americans on Thursday that a military strike against Syria was in their interest following a gas attack last week, and Britain said armed action would be legal, but intervention looked set to be delayed until U.N. investigators report back. A U.S. government report showed the nation's economy accelerated more quickly than expected in the second quarter due to a surge in exports, bolstering the case for the Federal Reserve to wind down a major economic stimulus program. "Gold is down on better GDP and as the risk of imminent military strikes is fading," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC. "The market can sell off pretty hard tomorrow if we don't hear anything concrete about attacks on Syria." The metal's appeal as a hedge against inflation decreased after the GDP data. Before Thursday's drop, gold rallied 5 percent in the last five sessions as rising geopolitical tensions boosted safe-haven bids. Spot gold was down 0.9 percent to $1,405.50 an ounce The metal is on track for its fourth consecutive weekly gain and its second straight monthly rise. U.S. Comex gold futures for December delivery fell $13.70 to $1,405.10 an ounce, with trading volume about 30 percent below its 30-day average, preliminary Reuters data showed. Gold came under pressure as the GDP data boosted the dollar index and sent crude oil futures prices lower after their recent sharp rally due to fears of supply disruptions from the Middle East.
INDIA'S IMPORT CURBS Demand for physical gold in Asia slowed this week as spot prices surged and emerging-market currencies plunged. Premiums in Singapore, Hong Kong and Tokyo all fell from two weeks ago.
India is considering a plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off a plunging rupee, sources familiar with the Reserve Bank of India told Reuters. India Trade Minister Anand Sharma's talk of possible monetization of India's gold holdings also weighed down on gold prices. Analysts said that while bullion sales by India might devastate gold prices, it was still unclear if the government was committed to the drastic policy. India, the world's biggest gold consumer, has already taken a number of steps to lower its imports of the metal and reduce its current account deficit. Among other precious metals, silver fell 2.2 percent to $23.80 an ounce, retreating from a 3-1/2 month high of $25.08 hit on Wednesday. Platinum dropped 0.7 percent to $1,519.50 an ounce, while palladium was down 1 percent at $735.50 an ounce
