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Gold crumbles as bears bite back

Published: 15:09 12 Sep 2013 BST

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Gold took a hammering as all of the safe haven-inspired buying after the Syrian crisis dissipated to be replaced by worries over next week’s Fed meeting.

Growing hopes that a diplomatic solution may be found to chemical weapons crisis in Syria sparked the sell-off.

Spot gold tumbled US$34 to US$1,331, with traders saying selling had been persistent once the price had broken through a support level at US$1,360.

The mood over gold was also soured by a strong US jobless claims number, which fell below 300,000 for the first time since 2006 after a 31,000 fall to 292,000 compared to last week.

Government officals said glitches may have affected the numbers, but economists said even with this the figures had almost guaranteed a start to tapering of its monetary stimulus policies by the US Federal Reserve next week.

Gold has been buoyed by the Fed’s US$85bn per month bond buying policy and the prospect of this spending been eased back boosted the dollar, which traditonally moves counter to the gold price.

Spot gold has fallen 19% since the Federal Reserve indicated it was considering tapering earlier this year.

Metals reserch house Thomson Reuters GFMS today predicted uncertainty for gold prices next year as the global economy recovers.

“We expect gold to edge higher through the rest of 2013 and towards $1,500 in early 2014, before a gentle decline  thereafter. 

“The falls in the second quarter of 2013 have flushed out many weak-handed holders, but it remains questionable as to whether there will be sufficient investor appetite to absorb large quantities of gold at prices much above $1,400.” 

Silver fell almost US$1 to US$22.19, while platinum dropped US$28 to US$1,442.

Major movers

Randgold Resources down 116p at 4,498

Fresnillo down 34p at 1,184p

Anglo American up 5p at 1,615p

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