PR: Gold falls as economics overshadow Syrian uncertainty
Gold was under pressure despite a US military strike in Syria seemingly moving closer and 80,000 gold miners in South Africa going on strike.
US president Barack Obama was in Sweden explaining why he was seeking the backing of Congress for limited military action against Syria.
HSBC said oil supplies would need to be disrupted by US action to keep the gold price above US$1,400. The bank said: “In order for gold to build on recent gains over $1,400/ounce, oil prices also have to remain strong, we believe. A relaxation in oil prices could also undermine gold.”
Investors also had half an eye on the US non-farm payrolls figures due on Friday. If these are strong, speculation that the US Federal Reserve will soon start to taper its monthly bond-buying programme will go into overdrive said traders.
The stimulus policies of the US and other central banks helped the gold price to record levels in 2011, but the prospect of the monetary taps being turned off has sent the gold price 17% lower this year so far.
Spot gold today fell US$18 to US$1,393, with silver down US$0.76 to US$23.49 and platinum US$39 lower at US$1,494.
The start of a widespread strike in South African by the NUM, one of the main mining unions, has so far had a limited impact on the gold price.
Broker SP Angel suggested today that the strike, which also reflects a power strugle with the more radical AMCU union that has made rapid inroads into the NUM’s traditonal heartland, will impact many more than 80,000 strikers with 200,000 workers and 2mln members of the broader community also likely to be affected by the strike.
The broker believes a prolonged strike would also cause lasting damage to many deeper level gold mines, many of which might never reopen.
“The mines employ more than 500,000 workers in South Africa and contribute some 10% to South African GDP. The strike is a major issue for the nation, it is likely to see the currency fall further and could potentially lead to political change.
“The strike action is estimated to cost the industry some US$30m of lost output per day, with the NUM talking of striking till Christmas.”
