But futures pare loss after China data, with silver moving higher
By Michael Kitchen and Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Gold futures traded lower Monday as a U.S. military strike on Syria appeared to be less certain, though upbeat economic data from China helped gold pare its loss and pull other metals to a gain.
Gold for December delivery GCZ3 -1.62% traded $5.70 below its Friday close, for a loss of 0.4% to $1,390.40 an ounce.
In Friday trade on the New York Mercantile Exchange’s Comex, gold had fallen 1.2% for a third day of losses.
The Nymex was due to remain closed Monday for the Labor Day holiday, and several analysts cited profit-taking ahead of the long weekend as helping the futures’ decline.
Meanwhile, uncertainty over a U.S. military action in Syria helped drive the yellow metal lower over the weekend.
U.S. President Barack Obama said Saturday he would seek approval from Congress for a strike against Syrian government forces in retaliation for their believed use of chemical weapons against civilians.
While Obama could still order a strike without congressional approval, such an action would carry political perils. And with Congress currently in recess, no head count to determine the likely outcome of the vote was possible.
“The market’s assumption is that we aren’t going to see military action” from the U.S. anytime in the immediate future, Dow Jones Newswires quoted Heritage West Financial analyst Ralph Preston as saying, though he added that “these are very fluid events.”
“Gold is typically sensitive to geopolitical events, and military escalation in Syria would be expected to be bullish for gold and would likely push prices well over $1,400 an ounce,” wrote HSBC analysts.
However, they also said that, longer-term, “gold rallies based solely on geopolitical events tend to be short-lived.”
Offsetting the downward pressure from the Syrian situation was a series of encouraging economic numbers from China, a major consumer of gold.
The Chinese government’s gauge of manufacturing activity, released Sunday, showed a better-than-expected reading, while a rival version of the index complied by HSBC and Markit, published Monday, showed manufacturing expanding for the first time in three months.
The data helped gold trim its loss, with the December contract having traded down $11.50, or 0.8% lower, before the release of the HSBC manufacturing index.
In Europe, the euro-zone manufacturing PMI rose to 51.4 in August from 50.3 in July, a slight upward revision from the 51.3 previously announced.
Other metals futures moved higher, with December silver SIZ3 -0.39% adding 50 cents, or 2.1%, to $24.02 an ounce, after plunging 2.6% on Friday. December silver had traded 8 cents lower just ahead of the HSBC China data.
Copper, often sensitive to Chinese economic data, rallied to send the December contract HGZ3 +0.54% up 5 cents, or 1.6%, to $3.29 a pound, more than erasing a 0.8% loss Friday.
Among the platinum group metals, October platinum PLV3 +0.22% slipped $3.10, or 0.2%, to $1,524.00 an ounce, while December palladium PAZ3 -2.05% climbed 20 cents to $724.05 an ounce.
