Gold News

Gold drops slightly as Syria agree to Putin’s proposal

By September 10, 2013 January 9th, 2014 No Comments

Gold drops slightly as Syria agrees to Russia’s proposal that it hands over control of its chemical weapons to the United Nations. Meanwhile the US puts its air strikes on hold, this apparent relaxation in the middle east has lead to a reduction in the gold price. Under Russia’s proposal, the geopolitical risk is reduced but not completely stamped out as the exact details of the proposal are not yet set in stone.

When taking a detailed view of gold’s performance over the years in terms of the effect on gold price in the aftermath of geopolitical crisis in most occasions the price has tended to recede, unless there is a sustained disruption in oil supplies.

This lessening threat is combined with next week’s federal committee FOMC meeting where it is expected details of the feds tapering scheme will be announced.

The outcome of this meeting is likely to shape the price of gold for the short to medium term, which has lead to major financial institutions re predicting gold prices. UBS are confident gold may fall to $1,250 which of course would set the perfect buying opportunity for Chinese investors and indeed western investors also. Merrill Lynch has stated that with all what is going on platinum may outperform gold.

The majority of investors have taken a wait and see approach as to whether the fed will announce its intention to scale back its vast asset purchasing. Gold remains to be extremely sensitive to US economic data and despite the recent worse than expected results Barclays have announced that this will not necessarily mean that the US will not begin its reining back programme later this month.

Asset purchases are likely to be initially reduced to $70 billion from $85 billion to cease in early 2014.

For now all eyes are on the next set of US economic data and the all important FOMC meeting next Tuesday /Wednesday (17th / 18th) September.