Skip to Content
Back to Blog

Gold breaks critical $1,400 threshold upon growing uncertainty in Syria and the U.S. and upon Asian demand

August 27, 2013157 view(s)

Gold broke through the critical $1,400 barrier today and may well continue to push higher, given growing concerns that the U.S. and allies may take military action in Syria and the approach of several events in September that may make for volatile markets, CNBC reported.

Investors have been realigning their portfolios while anticipating the Federal Reserves’ mid-September meeting, budget debates as Congress returns to session, and the German election on Sept. 22.

On Monday, gold moved higher late in the day following a speech from U.S. Secretary of State John Kerry in which he said that the government believes Syria used chemical weapons on its own citizens and that President Obama believes anyone using chemical weapons should be held accountable. Kerry called Syria’s actions a “moral obscenity.”

"What I call a small fear premium suddenly appeared," said George Gero, an analyst at RBC, after gold moved higher on the Syria news.

“The December gold futures contract rose above $1,400 in late trading, after closing at $1,393.60 per ounce Monday. The metal broke $1,400 for the first time in 11 weeks earlier in the trading day and reached an intra-day high of $1406.90, wrote CNBC's, Patti Domm.

“There are a number of factors affecting the price and gold is moving as a safe-haven asset, and on other fundamental reasons, like the perception China's economy may be improving,” continued Domm.

On Friday, weaker than expected home sales boosted the yellow precious metal. That news was followed on Monday by surprising data about a sharp decline in the purchase of durable goods. These two events suggest the Fed may not begin to taper the $85 billion monthly bond buyback stimulus program that has been effectively printing money and pumping it freely into the U.S. economy for several years.

In addition, political unrest in Egypt is also causing concern, as is the strong and growing demand for physical gold in China.

"The investor looks around and says: 'Gee, everything looks a bit dodgy and gold is holding up,'" said Gero. He also said gold's selloff early on Monday was prompted by maneuvering around the pending Tuesday expiration of options.

“When we come back next week from the U.S. Labor Day holiday, you have Congress coming back in the middle of the month. You have the jobs report. There are some heavy issues here upcoming that's going to impact the marketplace," said Jim Wyckoff, senior analyst at Kitco.

Gero also told CNBC that gold has momentum on its side.

“Gold historically outperforms in September. Since 1990, September has been the best month of the year for gold, rising an average of 2.7 percent. The psychological $1,400 area could also be a magnet for investors,” wrote Domm.

Posting in:
United States Gold BureaubyUnited States Gold Bureau
This site uses cookies to improve your experience. By clicking, you agree to our Privacy Policy.