Gold eased on Thursday from a five-day rally that had propelled the metal to its highest since mid-May,losing some of its safe-haven urgency as U.S. Military strikes against Syria didn’t seem imminent and investors booked profit.
The United States and its allies have been discussing possible military action against Syria for last week’s deadly chemical attack,stoking buying interest in gold and pushing it above $1,400 an ounce for the first time since early June.
But U.S. President Barack Obama said on Wednesday any strike would be “tailored,limited,” even as he faced new obstacles with allies and lawmakers that could delay any immediate action.
“Since there hasn’t been any fresh news on the Syrian conflict,some people are taking profit above $1,400 levels,” said Yuichi Ikemizu,a branch manager for Standard Bank in Tokyo.
“Gold could rally to $1,440-$1,450 if the U.S. strikes,but since it is expected to be a short engagement,the rally will not be that huge.”
Spot gold on Thursday had dropped 0.6 per cent to $1,408.84 an ounce by 0309 GMT. It had gained nearly $70 an ounce in the five sessions to Wednesday.
At its 3-1/2 month high of $1,433.31 hit on Wednesday,gold had gained 21 per cent from the three-year low of $1,180.71 hit on June 28,pushing the metal into bull-market territory.
Some analysts say prices are bound to fall as the rally over the last few days has also been spurred by short covering and technical buying.
PHYSICAL SELLING UP
Demand for physical gold in Asia slowed this week as the spot prices surged and emerging market currencies plunged. Premiums is Singapore,Hong Kong and Tokyo all fell from two weeks ago.
Standard Bank’s Ikemizu said consumers were selling their old gold due to the higher prices,especially in Southeast Asia.
“We hasn’t seen any scrap selling in the last couple of months. The $1,400 level is enough to bring some sellers,” Ikemizu said.