LONDON: Gold fell to a five-week low yesterday, heading for its worst week in more than two months on prospects the United States would soon curb its stimulus and as fears of a US-led military attack on Syria receded.
Gold hit its weakest since August 8 at $1,304.56 earlier and is on track to record its biggest weekly drop since June 21 at 5.3 percent so far. It was quoted at $1,317.30 an ounce, down 0.2 by 1455 GMT. As technical support at 100- and 50-day moving averages (MA) has been broken, traders said $1,307 should now provide a floor, but a consistent fall through that level would trigger further losses to August’s lows of $1,273.
US gold futures for December also touched their lowest since August 9 at $1,304.60 an ounce and stood at $1317.14, still down $13.20.
“Gold’s drop at the beginning of the week was mostly due to the waning safe-haven buying after the diplomatic action in Syria,” MKS SA Senior Vice-President Bernard Sin said.
“But now it’s all about the Fed tapering talks and expectations that the central bank will start, albeit slowly, as soon as this month.”
The US Federal Reserve may announce a cut in its $85bn monthly bond purchases at the end of its two-day meeting on September 18. Gold lost 19 percent this year after the Fed signalled it would start reining in nearly five years of quantitative easing that weighed the dollar down and encouraged investors to buy hard and non-interest rate bearing assets like gold.