Gold falls below $1 400 on Fed stimulus outlook, easing Syria tension

Gold extended losses after Thursdays upbeat U.S. data supported the case for Fed to decelerate its monetary easing program. Easing concern over an U.S.-led attack against the Syrian regime reduced demand for the metal as a safe haven for wealth storage after the U.K. parliament rejected Prime Minister David Camerons proposal for an intervention in the Syrian civil war. Silver and platinum fell to a one-week low.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1 396.90 per troy ounce at 8:19 GMT, down 1.13% on the day. Prices held in a range between days high and low of $1 411.10 and $1 394.60. The precious metal slipped 0.9% on Thursday and plunged to negative territory on a weekly basis following Fridays losses.

Gold was initially pressured on Thursday following the release of upbeat U.S. economic data, which outperformed analysts projections. The Commerce Department reported that the U.S. economy grew more in the second quarter than previously estimated in July. The U.S. Preliminary (Revised) GDP marked a growth of 2.5% from a year earlier, compared to the flash reading of 1.7% published on July 31 and surpassing analysts’ expectations for a correction to a 2.2% advance. Investments in housing accounted for almost a fifth of the economy’s growth during the respective three months.

The report also showed that American households had spent more money in the second quarter with the Consumer Spending index surging 1.8% and surpassing analysts’ expectations for a 1.7% rise. Core Consumer Spending Index, which excludes the more volatile energy and food expenditures, rose by 0.8% in the three months to June, matching the preceding period’s advance and analysts’ projections.

Meanwhile, the Department of Labor reported that fewer people than anticipated filed for initial jobless payments last week. In the week ended August 24, U.S. initial jobless claims fell to 331 000, beating forecasts for a drop to 332 000 from the preceding period’s upward revised reading of 337 000 claims.

The precious metal 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. Both oil and gold however retreated from multi-month highs amid easing concern over an imminent U.S.-led attack against the Syrian regime. The U.K. House of Commons voted to reject a proposal by Prime Minister David Cameron for an attack against the Syrian regime on Thursday. U.S. Defense Secretary Chuck Hagel said that the United States won’t attack without allies.

However, many analysts still see a possible U.S. military attack against Syria carried out despite the U.K. stepping back. Gold traders went most bullish since March, according to a Bloomberg survey. Twenty-three out of 34 participants in the poll predicted prices will surge next week, while six were bearish and five wagered futures will remain flat.

Alexandra Knight, an economist at National Australia Bank Ltd., said for Bloomberg: “The GDP numbers came out a bit better than what was expected. People might still see a strike as potentially still happening.”

Market players will be closely watching for the remaining U.S. data this week to further gauge the possibility for the Federal Reserve to trim its bond purchases in September. 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, platinum and palladium tracked golds downward momentum. Silver December futures fell to $23.653 an ounce at 8:13 GMT, down 2.02% on the day. Prices ranged between days high of $24.050 and low at $23.485, the lowest since August 23. The metal is however poised for its best month since April 2011 with prices having surged 19% so far.

Platinum for October delivery traded at $1 515.25 per ounce, marking a 0.47% daily decline. Futures held in range between high at $1 521.55 and low of $1 512.95, the lowest since August 22. The metal is headed for its first weekly decline in eight, but is still set for a second monthly advance.

Palladium December futures fell to $733.50 per troy ounce at 8:17 GMT, down 0.89% on the day. The metal is set for a second weekly decline in a row. Prices ranged between days high of $739.70 and low at $733.50, the weakest level since August 8.