Daily Nugget: Impact Of Syria On Gold Receding, Focus On Tapering

For the last month potential military action in Syria has provided a new fundamental for gold price investors to look put for. The effect of war, or at least talk of it, may not be an issue for much longer. In the early hours of this morning Russia took up John Kerry’s (off the cuff) comment that should Syria hand over chemical weapons then the threat of missile action would seem less likely.

It has now been reported that Russia are offering to work with Damascus to put the rumoured weapons under international control. Reuters reported this morning that Syrian Foreign Minister Walid al-Moualem said on Monday after talks in Moscow, praising the Kremlin for seeking to “prevent American aggression”.

Gold finished the day flat yesterday on the back of the Syria news. President Obama is due to give a speech this evening, all ears will be monitoring his tone and the general sentiment towards military action.

On Wednesday the Senate is due to take its first vote on a resolution that would allow the use of military force on Syria. If this will still go ahead, given developments in Russia, remains to be decided.

Overall, however the impact of Syria on gold appears to be of receding importance.

Of course, as the chances of war in the Middle East become increasingly slender attention returns to their favourite place – Fed tapering.

Friday’s labour-market data showed a slower than expected pace of job creation in the US. Whilst this has seen some speculation that the FOMC will decide not to taper following their September meeting, it appears gold will trade in a narrow range in the run up to the meeting next week.

San Francisco Fed President, John Williams, has said that Friday’s non-farm payrolls data was in line with the central bank’s expectations. “We are continuing to get closer to this marker of substantial improvement.” He also said that he does not expect the Fed to increase rates once the 6.5% target has been met.

The US silver mine output increased in June by 1,700 kg from a year ago. It was thanks to Nevada’s silver production that the figure was so strong, other silver producing states experienced a dip in the month from May to June.

Government data released on Friday showed speculators reduced their bearish bets on gold and increased their bullish positions.

It’s not just the UK Royal Mint who are introducing new coins this month. The Royal Canadian Mint might have just done one better by releasing a commemorative 75th anniversary Superman coin. I’ve just had a look with coloured pictures of Superman and his logo, I’m not I would be able to resist.

TD Securities believe declining gold demand is on the cards for China. Whilst Hong Kong imports have remained elevated, last month saw the Shanghai premium fall and the gold price moving higher. The group believes this will cause a slowdown in Hong Kong imports.