FOCUS: Gold Rises On Safe-Haven Buys Over Syria, Technical Charts, Fed QE Debate
(Kitco News) - Gold prices are stronger in early North American dealings on Tuesday, supported by several factors: safe-haven buying on nervousness about possible U.S. military action against Syria, bullish technical-chart patterns and thoughts that the Federal Reserve might abstain from curbing its bond purchases.
December Comex gold was up $24.30, or 1.7%, to $1,417.40 an ounce as of 9:39 a.m. EDT. The contract peaked at $1,423, its strongest level in two months.
New York Mercantile Exchange crude oil was also strong, with October crude up $2.64 a barrel to $108.56. Crude oil is especially sensitive to tensions flaring in the Middle East. Although Syria is not a major oil producer, concerns are that violence from the two-year civil war could spill over to other countries and disrupt oil supplies.
Several analysts are citing a flare-up in tensions in Syria as lifting gold prices.
“Geopolitical concerns have ratcheted up over the last 48 hours,” said Robin Bhar, head of metals research at Societe Generale.
Concerns about the Syrian government’s alleged use of chemical gas against rebels last week were amplified when U.S. Secretary of State John Kerry said late Monday there was “undeniable” evidence in the deadly attack. News reports said Kerry’s comments signal that the Obama administration is coming closer to a decision of whether to use military force to intervene in the conflict. White House Press Secretary Jay Carney also said Monday while the attack with chemical weapons was a “clear violation of international norm,” he added that President Barack Obama has made no decision on military action.
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Market Nuggets: BMO: Gold Tops $1,400/Oz Amid Syrian Crisis, Could Hit $1,500
Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA in Geneva, Switzerland, said the Syria concerns added to the gains gold accumulated Monday after a weaker-than-expected U.S. durable goods report, pushing the market through technical- chart resistance at $1,407.
The softer durable-goods reports came on the heels of weak home sales data. That renewed discussion regarding whether or not the Fed will announce plans to taper its bond-buying purchases, known as quantitative easing, at the September monetary policy meeting.
Bhar said each piece of U.S. economic data will be dissected going into the Sept. 18 meeting, which will spur a “’will they, won’t they’ debate which will ebb and flow until (the meeting). If they delay the decision to taper, that will help gold, but if they announce in September that they will taper, that will negatively impact gold.”
Ross Norman, chief executive officer of Sharps Pixley, said the debate over the Fed’s quantitative easing program and short covering are doing more to light a fire under gold than the Syrian conflict.
“A lot has been made on Syria, but … it (Syria) is just a good coat-hanger to ascribe why gold prices are higher,” he said.
Norman said QE has a much bigger influence on gold right now and since the Fed hasn’t said much definitively about whether or not policymakers will taper in September, the gold market is trying to pin down an answer.
“The gold market is trying to call the Fed’s bluff. It’s asking ‘so when, so when, so when?’” Norman said.
He also said he believes short covering, which is buying back of previously sold positions, is behind the rapid jump in prices. He also noted that until recently speculators held a record short position in gold, which has only started to be reduced. Sentiment may be turning “mildly” positive in gold, he added, as not only have exchange-traded fund sales have eased, some ETF buyers lightly stepped in last week.
Looking at technical charts, Nabavi said the next immediate area of resistance for December gold is $1,425, and above that he sees no real ceiling until $1,485. Norman said gold could run to $1,450 if the current trend holds.
(Kitco News) - Gold prices are stronger in early North American dealings on Tuesday, supported by several factors: safe-haven buying on nervousness about possible U.S. military action against Syria, bullish technical-chart patterns and thoughts that the Federal Reserve might abstain from curbing its bond purchases.
December Comex gold was up $24.30, or 1.7%, to $1,417.40 an ounce as of 9:39 a.m. EDT. The contract peaked at $1,423, its strongest level in two months.
New York Mercantile Exchange crude oil was also strong, with October crude up $2.64 a barrel to $108.56. Crude oil is especially sensitive to tensions flaring in the Middle East. Although Syria is not a major oil producer, concerns are that violence from the two-year civil war could spill over to other countries and disrupt oil supplies.
Several analysts are citing a flare-up in tensions in Syria as lifting gold prices.
“Geopolitical concerns have ratcheted up over the last 48 hours,” said Robin Bhar, head of metals research at Societe Generale.
Concerns about the Syrian government’s alleged use of chemical gas against rebels last week were amplified when U.S. Secretary of State John Kerry said late Monday there was “undeniable” evidence in the deadly attack. News reports said Kerry’s comments signal that the Obama administration is coming closer to a decision of whether to use military force to intervene in the conflict. White House Press Secretary Jay Carney also said Monday while the attack with chemical weapons was a “clear violation of international norm,” he added that President Barack Obama has made no decision on military action.
Related Stories At Kitco News:
Market Nuggets: BMO: Gold Tops $1,400/Oz Amid Syrian Crisis, Could Hit $1,500
Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA in Geneva, Switzerland, said the Syria concerns added to the gains gold accumulated Monday after a weaker-than-expected U.S. durable goods report, pushing the market through technical- chart resistance at $1,407.
The softer durable-goods reports came on the heels of weak home sales data. That renewed discussion regarding whether or not the Fed will announce plans to taper its bond-buying purchases, known as quantitative easing, at the September monetary policy meeting.
Bhar said each piece of U.S. economic data will be dissected going into the Sept. 18 meeting, which will spur a “’will they, won’t they’ debate which will ebb and flow until (the meeting). If they delay the decision to taper, that will help gold, but if they announce in September that they will taper, that will negatively impact gold.”
Ross Norman, chief executive officer of Sharps Pixley, said the debate over the Fed’s quantitative easing program and short covering are doing more to light a fire under gold than the Syrian conflict.
“A lot has been made on Syria, but … it (Syria) is just a good coat-hanger to ascribe why gold prices are higher,” he said.
Norman said QE has a much bigger influence on gold right now and since the Fed hasn’t said much definitively about whether or not policymakers will taper in September, the gold market is trying to pin down an answer.
“The gold market is trying to call the Fed’s bluff. It’s asking ‘so when, so when, so when?’” Norman said.
He also said he believes short covering, which is buying back of previously sold positions, is behind the rapid jump in prices. He also noted that until recently speculators held a record short position in gold, which has only started to be reduced. Sentiment may be turning “mildly” positive in gold, he added, as not only have exchange-traded fund sales have eased, some ETF buyers lightly stepped in last week.
Looking at technical charts, Nabavi said the next immediate area of resistance for December gold is $1,425, and above that he sees no real ceiling until $1,485. Norman said gold could run to $1,450 if the current trend holds.
