Gold Drops for Third Day as Syria Tension Eases

Gold declined for a third day as prospects for an attack against Syria receded, and on bets the U.S. Federal Reserve will start to pare stimulus as the economy improves.

Spot gold lost as much as 1.6 percent to $1,373.38 an ounce, the lowest level since Aug. 23, and was at $1,382.88 at 8:11 a.m. in Singapore. Prices have retreated since reaching a three-month high of $1,433.83 on Aug. 28 as improving data supported the case for the Fed to start reducing the $85 billion in monthly asset purchases this month.

While the Syrian crisis helped gold post a second monthly gain in August on increased haven demand, prices are down 17 percent this year. U.S. President Barack Obama said on Aug. 31 that he’ll seek approval from Congress before ordering a strike against Syria for its alleged use of chemical weapons against civilians. U.K. Prime Minister David Cameron lost a parliamentary vote on military action last week.

“Prices drifted lower as risks of an attack on Syria subsided,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail. “Prices also declined on expectations that the Federal Reserve will taper stimulus.”

(Source: Bloomberg)