Gold Falls As Syria Concerns Ease Further
FRANKFURT-GERMANY (Sept 12) Gold prices fell Thursday as diplomatic efforts between the U.S. and Russia over the situation in Syria gathered momentum, but most other markets traded in tight ranges as traders dug in to wait for next week's crucial U.S. Federal Reserve meeting.
U.S. Secretary of State John Kerry is due to meet Russian Foreign Minister Sergei Lavrov in Geneva on Thursday to weigh a proposal for removing stockpiles of chemical weapons from the Syrian government's control and forestalling a threatened U.S. military attack.
That has dulled gold's allure as a safe retreat, with spot prices slipping 1.7% to $1,342.70 a troy ounce in Europe.
Stocks in Europe and Asia posted modest gains, after the Dow Jones Industrial Average index advanced 0.9% in the U.S. The Dow Jones index has now risen on almost every trading day in September. The S&P 500 index rose for the seventh straight session Wednesday, its longest winning streak since July.
"With Syria-related concerns on the backburner for now and the upcoming Federal Open Market Committee meeting not yet quite in focus, risky assets retain a bid tone against the backdrop of an improving global growth picture," analysts at Barclays said in a note to clients.
The New Zealand dollar rallied strongly Thursday, rising to three-week highs against the greenback and Australian dollar after the Reserve Bank of New Zealand said rate rises were on the horizon as the economy improves, despite earlier having left interest rates on hold.
"This arguably catapults the Reserve Bank of New Zealand into pole position as the most hawkish G10 central bank out there," UBS currency strategists Gareth Berry and Geoffrey Yu said in a note.
Bank of England Governor Mark Carney will once again be in focus Thursday as faces questions from the Treasury Select Committee, with the central bank's plans to keep a lid on interest rates until 2016 likely to come under scrutiny.
"The recent strength of U.K. data, especially the labor market data released yesterday, could see Carney questioned regarding the ability of the BoE to hold rates low for as long as suggested," currency strategists at Morgan Stanley said in a note. "However, we would expect Carney to draw attention to the potential tightening of financial conditions, as discussed in his speech two weeks ago.
"Hence, even with the current strong domestic data, we believe the BoE will continue to provide a dovish stance," the strategists added.
Also Thursday, Indonesia's central bank announced a surprise quarter-percentage-point increase in its benchmark policy rate, as it sought to shore up the rupiah and curb inflationary pressures. It also raised the key money market Fasbi rate to 5.50%.
