Oil price slips on Syria news; gold slides before Fed
CHICAGO (Sept 13) Oil sank this week on receding fears of a US-led military strike against Syria, and gold hit a one-month low on hopes of an end to US Federal Reserve stimulus.
Investors kept a keen eye on developments in the crude-rich Middle East, as the United States and Russia discuss a plan to remove Syria's chemical weapons.
Market expectations are growing that the Fed will begin from tapering its $85 billion-a-month asset purchase policy, known as quantitative easing, next week.
The US cental bank will hold its key monetary policy meeting on September 17-18.
OIL: The oil market fell on easing worries over a possible strike against Syria, having risen strongly the previous fortnight on worries over a potential conflict.
New York crude had struck $112.24 a barrel at the end of August, which was the highest level for more than two years.
Although Syria is not a major oil producer, traders are nervous about a broader conflict in the crude-rich Middle East region, including neighbouring Iraq, which is becoming a major exporter.
Russian President Vladimir Putin on Friday insisted Syria was serious about giving up its chemical weapons, as Moscow and Washington entered a second day of talks aimed at averting US-led military action.
Ahead of the main meetings in Geneva, US Secretary of State John Kerry and his Russian counterpart Sergei Lavrov first met with the UN-Arab League envoy to Syria, Lakhdar Brahimi, to discuss a parallel proposal for peace talks.
But it was the issue of chemical weapons that was set to dominate, after Syria's President Bashar al-Assad confirmed for the first time on Thursday that he planned to relinquish its chemical arms.
"Oil has shed some 3.0 percent of its value since Monday as what many perceived to be a flippant remark by US Secretary of State John Kerry last week at a foreign office press conference has lead to what may be a face-saving breakthrough for the Obama administration in the Syrian situation," said analyst Joe Conlan at British-based energy consultancy Inenco.
"Oil fell from the open on Monday at $116 to be trading on Friday afternoon at $112, despite economic data released earlier in the week which showed a further strengthening in the Japanese and Chinese economies."
He cautioned that any sign of Fed tapering could push prices lower next week, but Syria jitters would provide some support.
"The meeting ... could see the US begin to unwind its quantitative easing policy, which could lead to a further strengthening of the dollar and this in turn may end up being bearish for oil prices," Conlan added.
The US-Russia talks have put off a planned US-led attack on Damascus for an alleged sarin gas attack by Assad forces last month that left hundreds of Syrians dead. Assad blames opposition rebels for the attack.
Oil was also supported by fresh reports of supply disruptions in crude exporter Libya after the country's National Oil Corporation on Thursday declared force majeure on three ports.
Libyan oil exports plunged in August by more than 70 percent after protesters forced terminals to shut in a row over pay.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in October dropped to $111.90 per barrel from $116.00 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for September sank to $107.58 a barrel, from $110.16.
PRECIOUS METALS: Gold hit a one-month low on easing Syria fears, falling US jobless claims and mounting expectations of Fed tapering.
"The price of gold is heading for its worst weekly loss in more than two months as we approach next week's vitally important Federal Reserve meeting," said IG trader Max Cohen.
"With the majority of economists surveyed of the belief that the Fed will indeed decide to trim its monthly bond purchases, investors are losing faith in the metal as a store of value."
Gold tumbled in intra-day deals on Friday to $1,305.04, which was the lowest level since August 8. That dragged sister metal silver to a similar low at $21.40.
"Besides the easing geopolitical tensions in the Middle East, which are causing demand for gold as a safe haven to decline, the market appears to be anticipating a reduction in Fed bond purchases next week," noted Commerzbank analysts.
By late Friday on the London Bullion Market, the price of gold fell to $1,318.50 per ounce from $1,387 a week earlier.
Silver slipped to $21.72 per ounce from $23.05.
On the London Platinum and Palladium Market, platinum dipped to $1,441 an ounce from $1,498.
Palladium firmed to $700 an ounce from $699.
