ZA:PRECIOUS-Gold falls as Syria tensions ease; silver jumps on short-covering
* Gold below $1,400, extends losses to 3rd day
* Obama seeks Congress approval before any Syria strike
* Asian shares rise, US dollar at 4-wk high
(Adds trader comment, updates prices)
By A. Ananthalakshmi
SINGAPORE, Sept 2 (Reuters) - Gold extended losses to a
third session on Monday, falling as much as 1 percent as U.S.
President Barack Obama chose to seek Congressional approval
before initiating any military action against Syria.
But silver rose 3.7 percent to $24.34 in late
afternoon trading as investors covered short positions. That,
along with short-covering in bullion, helped gold pare some of
its losses.
Spot gold was down 0.1 percent at $1,394.30 an ounce
by 0636 GMT, after earlier dropping to a one-week low.
"Ever since the lows this morning, we have had some short
covering. People are using the opportunity to put out some long
positions," said one Hong Kong-based trader, referring to both
gold and silver.
"The moves have been exaggerated by the lack of liquidity
due to the U.S. holiday," the trader said. U.S. markets are
closed for the Labor Day holiday.
Gold had risen last week to its highest since mid-May as
possible military action against Syria prompted safe-haven
buying, but gave up some gains after British lawmakers voted
against any involvement.
"The easing tensions in Syria have caused gold prices to
dip," said Barnabas Gan, an analyst at OCBC Bank in Singapore.
"Our base case scenario is that the Syrian issue will not
blow up. We are still bearish on gold," said Gan, who expects
prices for the metal to fall to $1,250 by year end.
Obama stepped back from the brink over the weekend and
delayed an imminent military strike against Syria to seek
approval from the U.S. Congress in a gamble that will test his
ability to project American strength abroad and deploy his own
power at home.
Gold has gained about $200 an ounce from its June low of
$1,180.71 largely on short covering and technical buying,
although it is still down about 17 percent for the year.
But with the drop below $1,400 on Friday, analysts expect
further dips. Spot gold may pause around support at $1,376 per
ounce, according to Reuters technicals analyst Wang Tao.
FED TAPERING
September is a key month for gold as many economists expect
the U.S. Federal Reserve to begin tapering its
commodity-friendly stimulus measures this month. The Fed is
expected to commence a two-day policy meeting on Sept. 17.
A scale-back would hurt prices as easy central bank money
pushed gold to an all-time high of about $1,900 in 2011.
Recent economic data from the United States has
disappointed, indicating that the third quarter has not gotten
off to a great start.
"(Economic) indicators are still looking good, though not as
favourable as we had hoped for," said OCBC's Gan.
COMEX gold and silver contracts show the most active months
(Reporting by A. Ananthalakshmi; Editing by Joseph Radford)
((ananthalakshmi.as@thomsonreuters.com)(+65 6870 3726)(Reuters
Messaging: ananthalakshmi.as.thomsonreuters.com@reuters.net))
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