By ARPAN MUKHERJEE
Oil and gold prices fell in early Asian trading Monday, as plans from the White House to delay a possible military strike in Syria eased oil-supply concerns and upbeat manufacturing data in China pushed traders out of the safe-haven metal.
Light, sweet crude for October delivery on the New York Mercantile Exchange fell by as much as 3.2% to $104.21 a barrel in the opening minutes of Asian trade, but recouped much of the decline almost immediately. At 0400 GMT, Nymex crude traded at $106.11 a barrel, down 1.4% from Friday's close. Brent crude on the ICE futures exchange for delivery in October was down 0.9% at $112.95 a barrel.
The most actively traded gold contract, for December delivery, fell 1.6%, to $1,373.60 troy ounce, the lowest level since Aug. 23, on the Comex division of Nymex. It has since pared losses to trade at $1,390/oz, down 0.4%.
Both oil and gold have been rising for most of the summer, with oil futures hitting a two-year high as recently as Wednesday on the back of supply concerns given tensions in the Middle East and supply disruptions in North Africa. Monday's pullback, stemming from U.S. President Barack Obama saying that he would wait for Congress to vote on proposed military action against Syria, could be reversed if lawmakers seem disposed to go along with Mr. Obama's recommendation.
"The [U.S.] President may still decide to take action unilaterally and which the Congress may approve, but, it is not the kind of an imminent unilateral action by the President, which seemed to be the case since the middle of last week," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Mr. Obama's administration has concluded that President Bashar al-Assad used chemical weapons in an attack that killed 1,500 civilians last month. A vote against a joint action in the United Kingdom's Parliament on Thursday along with Germany's decision not to participate forced a decision on whether to conduct a unilateral U.S. operation.
Also weighing on prices, Saudi Arabia, the most passionate advocate of tough international action against Syria, struggled on Sunday to assemble an Arab coalition that would give the U.S. and other Western allies vital political backing for airstrikes.
Monday's broad declines came after hedge funds and other money managers last week increased bets on gold to the highest point in seven months. Money managers also increased their bets on crude oil last week for the first time in five weeks.
December Comex gold rose 4.6% between Aug. 21--the day of the chemical attack in Syria--and Aug. 28, reaching $1,434/oz, its highest level since May 14.
"The initial drop in electronic trade was likely due to some panic as markets opened after the weekend," said Masaki Suematsu, Tokyo-based commodity analyst at Newedge Japan Inc.
In addition to the Syria threat declining, safe-haven gold was further hurt by upbeat manufacturing data over the weekend from China, the biggest consumer of industrial metals in the world. While gold fell, the three-month copper contract on the London Metal Exchange jumped more than 2% to $7,245 a metric ton.
China's manufacturing activity in August expanded to 51.0, the best reading in 16 months, from 50.3 in July, helping sentiment among metal traders as worries of an economic slowdown in the world's second biggest economy abated. .
Trading across commodity markets is expected to be low due to a holiday in the U.S., and traders will be looking forward to more news on Syria, analysts said.
"Some traders chose to liquidate their long positions in the morning," as an imminent threat of an attack on Syria by the U.S. and its allies receded, said Peter Fung, Hong Kong-based director of gold dealer Wing Fung Precious Metals. He said 3,000 long positions--bets that a commodity will rise--on the Comex division of the New York Mercantile Exchange were liquidated in the morning.
