Gold heads for worst week since June on Syria and Fed

LONDON (Sept 14)  Reuters reported that gold reversed early gains and fell to its lowest in more than a month as US futures extended losses on fears the United States would curb its stimulus soon and as a US strike on Syria looked less likely.

Purchases from jewellers in Hong Kong and mainland China initially helped gold gain more than half a percent but heavy selling of New York COMEX and bullion futures on Tokyo Commodity Exchange spilled into the cash market.

The US Federal Reserve may announce a cut in its massive monthly bond purchases on September 18 to start reining in nearly 5 years of super easy dollars that had sparked fears of inflation and encouraged investors to buy gold. Cash and US gold futures were on course for their worst week since June on expectations of the Fed rollback.

Mr Yuichi Ikemizu branch manager for Standard Bank in Tokyo said that "It's just the stop (loss) orders. Obviously people are getting more and more bearish."

US gold futures for December hit an intraday low of USD 1,307.80 an ounce, its weakest since August 9 and stood at USD 1315.70 by 0647 GMT down 1.12%.

Gold hit a high of USD 1,330.56 an ounce on physical buying before falling to a low as USD 1,307.99, its weakest in five weeks. It was later quoted at USD 1,315.61 an ounce down USD 4.58.

EDT by CME Group's Stop Logic mechanism to prevent large movements. In the one minute around the 20 second trading pause, prices slid USD 10 with an unusually heavy 4,300 contracts changing hands.

Cash gold rallied above USD 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.