Gold rallies to the highest since May on safe haven demand amid Syria jitters

Gold rose to a 3 1/2-month high on Wednesday as safe-haven buying continued to underpin the market following the escalating tension in Syria. Silver and platinum extended gains, while palladium fell.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1 426.00 per troy ounce at 8:13 GMT, up 0.41% on the day. The precious metal surged to a days high of $1 433.50 per ounce, the strongest level since May 14, while days low stood at $1 413.30 an ounce. Futures surged 1.1% on Tuesday, a fourth consecutive daily gain, and extended current weeks advance to 2.0% after adding 6.3% in the preceding two five-day periods.

Gold extended gains as investors sought safe haven security amid expectations for an imminent U.S. intervention in the Syrian civil war. The United States, Great Britain and France moved closer to a military attack as they laid justifying legal groundwork for taking action against the Syrian regime which allegedly used chemical weaponry against civilians last week.

Defense Secretary Chuck Hagel told the BBC the U.S. military is “ready to go” if Obama makes the order. “We have moved assets in place to be able to fulfill and comply with whatever option the president wishes to take,” Hagel said yesterday during a trip to Brunei for the BBC. This comes after U.S. Secretary of State John Kerry announced on Monday that there is “undeniable” evidence the Syrian regime led by President Bashar al-Assad used chemical weaponry against civilians in the Damascus suburbs last week. Assad denied responsibility and blamed rebels for staging the attacks.

David Lennox, a resource analyst at Fat Prophets, said for Bloomberg: “The market is really focused on the safe-haven aspect. There was a bit of risk off the table, with equity markets heading south on the back of escalating words about actions on Syria.”

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, rose by 0.1% to 921.03 tons yesterday, the highest since August 1. Holdings rose to 920.13 tons on Friday and marked a second weekly advance in a row. Assets rose on a weekly basis for the first time since December the preceding five-day period.

Gold prices were also supported recently following downbeat U.S. new homes sales and durable goods orders, which dampened speculations that the Federal Reserve will begin decelerating its Quantitative Easing program in as early as September.

The Conference Board reported on Tuesday that its Consumer Confidence index rose to 81.5 in August, confounding analysts expectations for a drop to 79.0 from the preceding month. Junes reading was revised upward to 81.0 from 80.3.

Market players will be keeping a close eye on this week’s U.S. economic data to further gauge Quantitative Easing’s tapering prospects. Wednesday’s Pending Home Sales might have advanced by 0.1%. On Thursday, the Preliminary Revised GDP is likely to have grown by 2.3%, while consumer spending and core consumer spending (Personal Consumption Expenditures) probably surged by 1.8% and 0.8% in the second quarter respectively. Initial Jobless Claims probably fell by 1 000 in the week ending August 24. On Friday, Personal Income and Spending are expected to have advanced in July but at a slower pace than in June. Core PCE on monthly and annual basis likely rose in July and the Chicago PMI and Final University of Michigan Confidence are projected to have advanced in August as well.

Elsewhere on the precious metals market, silver and platinum gained, while palladium fell. Silver for December delivery traded at $24.883 per ounce at 8:06 GMT, up 0.74% on the day. Futures rose to a days high of $25.165, the highest since April 14, while days low stood at $24.508. Platinum October futures rose to $1 540.05 an ounce, marking a 0.52% daily gain. Prices ranged between days high and low of $1 546.50 and $1 525.90 per ounce respectively. Meanwhile, palladium for December delivery fell to $749.70 per ounce at 8:10 GMT, down 0.21% on the day. Futures held in range between days high and low of $751.90 and $745.00 an ounce respectively.