Gold Braces For Its Biggest Weekly Decline In Months

Precious-Gold plunged to five-week low on Friday with mounting expectations the Fed would taper its stimulus next week and as a U.S. military strike against Syria is likely to be avoided.

Gold is currently trading around $1316.24 an ounce after hitting a high of $1330.72 and a low of $1308.05, where the metal’s fall was buoyed by the breach of support at $1336.99 yesterday, noting that this level represents Daily SMA 50 level.

The shiny metal has corrected 50 percent Fibonacci Retracement to the upside trend that has begun since touching a low of $1180.64 on June 28.

After the breach of $1400 support, the next key support for the metal would probably be at $1300.

Gold is heading for a third straight weekly decline, where it has lost, so far, 5.36 percent, following the sharp drop of 3.2 percent recorded yesterday.

Meanwhile, there are high predictions the Fed would announce it will unwind its monthly bond purchases during its September 17-18 meeting to put more pressure on gold as it reduces its allure as an inflation hedge.

Data released yesterday from the U.S. signaled that initial jobless claims fell to 292,000 in the week ended September 6, the lowest level since April 2006, from a prior of 323,000, lower than median forecast of 330,000.

On the political side, while gold has benefited from the threats of striking Syria to hit a high of $1423.36 on August 28, it dropped with the ease in tensions as the U.S. currently is pursuing diplomatic solutions.

Yesterday, U.S. Secretary of State John Kerry and Russian foreign Minister Sergei Lavrov met in Geneva to discuss the possibility of putting Syria’s chemical weapons under international control, where they will continue their negotiations on Friday with the attendance of the international envoy for Syria Lakhdar Brahimi.

It is worthwhile to mention that Bashar al-Assad has accepted the Russian proposal but Obama said he is skeptical about it and urged citizens to be ready for any possible military action if diplomatic methods failed.

Crude oil for October’s delivery fell today to a low of $108.09 a barrel while it is currently hovering around $108.12.

Among other precious metals, sliver dropped to $21.83 from the session`s opening of $21.92, platinum retreated to $1439.50 from $1442.16, and palladium edged up to $692.75 from $689.22.