Gold near three-week low as Syria tension recedes

Gold futures traded on the upside in the early European session but remained fairly unchanged as diminishing concern over U.S. military intervention in Syria limited safe haven demand for the metal. The market was also pressured amid broad expectations that the Federal Reserve will begin trimming its monetary easing program after FOMCs upcoming meeting next week. Silver, platinum and palladium advanced.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December traded at $1 366.50 per ounce at 8:29 GMT, up 0.18% on the day. Prices hovered near August 21s three week-low and held in a days range between $1 368.20 and $1 356.90 per ounce respectively. The metal fell by 1.5% on Tuesday, extending its weekly decline to 1.8%.

The precious metal rose to a 3 1/2-month high of $1 433.50 per ounce on August 28 as escalation of the Syrian conflict stoked safe haven demand, which however was recently curbed on signs that the tension might be resolved by peaceful diplomatic means. On Tuesday, Foreign Minister Walid al-Muallem said during a trip to Moscow that Syria accepted Russia’s proposal for granting international control to its chemical weapons as a way for peacefully resolving the conflict with the U.S. and averting military intervention.

“Yesterday we had a round of very fruitful negotiations with Foreign Minister Sergei Lavrov and he proposed an initiative concerning chemical weapons,” al-Muallem said. “And already by the evening we agreed to the Russian initiative.”

Later in the evening, President Barack Obama asked Congress in a televised address to the nation to delay voting in favor or against authorization of military action against Syria in order, seeking a diplomatic resolution to the problem after the Middle Eastern country agreed to put its chemical weapons under international control.

Meanwhile, Goldman Sachs predicted that gold will extend its 2013s first annual drop in 13 years in 2014 as the Federal Reserve will taper its monetary stimulus program and is expected to bring it to an end by the middle of the year. The groups analysts expect that policy makers will announce the begin of QE tapering at the upcoming FOMC meeting on September 17-18, based on the consistent improvement of the economy.

Jeffrey Currie, analyst at Goldman Sachs Group Inc. said yesterday for Bloomberg: “Gold prices have started to decline with the declining probability of a military intervention. We continue to expect that gold prices will decline into 2014 on the back of an acceleration in U.S. activity and a less accommodative monetary-policy stance.”

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, remained unchanged at 917.13 tons yesterday, data on its web site showed.

Elsewhere on the precious metals market, silver, platinum and palladium also advanced. Silver futures for delivery in December rose by 0.43% to $23.115 per troy ounce at 8:17 GMT. Prices fell to a session low of $22.795 per ounce, while days high stood at $23.245. Platinum October futures rose by 0.56% to $1 482.35 an ounce at 8:27 GMT and ranged between days high and low of $1 487.25 and $1 473.20 per ounce respectively. Palladium for December settlement surged 1.35% to $702.00 and kept in days range between $703.00 and $694.50 per ounce.