Gold edges up after Syria strikes

image

BENGALURU: Gold prices edged higher early on Monday, even as the dollar and equity markets firmed on relief that weekend missile strikes against Syria by the United States, France and Britain may be a one-off event.

FUNDAMENTALS

Spot gold was up 0.1 per cent at $1,346.1 an ounce as of 0115 GMT after an initial dip, and US gold futures rose 0.1 per cent to $1,349.2 an ounce.

US, British and French forces pounded Syria with air strikes early on Saturday in response to a poison gas attack that killed dozens of people last week, in the biggest intervention by Western powers against Syrian President Bashar al-Assad.

Western powers will study “options” if Syria’s government again uses chemical weapons, but nothing is planned as yet, Britain’s foreign minister said on Sunday, after raids on Syrian targets triggered heated debate over their legality and effectiveness.

Share markets started firmer in Asia on Monday amid relief US-led strikes on Syria looked like being a one-off event that avoided a direct confrontation with Russia, weighing on oil prices and safe-haven Treasuries.

The dollar firmed on Monday, hovering near a two-month high against the yen, after the market gained some clarity following military strikes on Syria by the United States and its allies at the weekend.

Russian President Vladimir Putin warned on Sunday that further Western attacks on Syria would bring chaos to world affairs, as Washington prepared to increase pressure on Russia with new economic sanctions.

Gold has risen more than 3 per cent this year, buoyed by international tensions and volatility in equities, but has yet to emerge from a tight trading range in the face of an expectation for rising US interest rates, traders say.

The Federal Reserve will probably need to raise interest rates at least three more times this year in the face of a robust US economy, even while possible trade disruptions pose risks, a top Fed policymaker said on Friday.

Inflation data last week that showed price pressures increasing were unsurprising, St. Louis Federal Reserve President James Bullard said on Friday as he downplayed the significance for monetary policy.

Hedge funds and money managers raised their net long positions in COMEX gold and contracts in the week to April 10, US Commodity Futures Trading Commission (CFTC) data showed on Friday.

Physical gold demand in second-biggest consumer India saw an uptick last week ahead of a key festival, although higher prices weighed on sentiment across the broader Asian markets.

Source: Economic Times