Wall Street climbed, extending the longest winning streak for the S&P’s 500 Index since July, as data showed China’s economy is improving amid signs of easing tensions over Syria. Gold continued to tumble as global tensions eased after President Obama called for a pause on authorizing a military strike on Syria, easing concern that a conflict will disrupt Middle East. Gold is trading at 1366.80 tumbling from a weekly high just under the 1400 price level. Gold swung between gains and losses, touching the lowest price in three weeks, after U.S. President Barack Obama asked Congress to delay a vote on military action against Syria, diminishing haven demand. Gold has retreated from a three-month high at the end of August as political tension in the Middle East eased. Obama has asked Congress to postpone a vote on military action while he pursues a diplomatic solution for Syria in light of Russia’s proposal for international control of the regime’s chemical weapons, he said in an address to the nation yesterday. The U.S. said Syria’s government used the weapons last month against civilians and had threatened a punitive strike in response.
With Syria moving off the front page traders are once again focusing on next week’s FOMC meeting. Traders are keenly watching US data for signs of what to expect from the Fed. Job openings in the U.S. fell in July to the lowest level in six months, signaling uneven progress in employment. The number of positions waiting to be filled declined by 180,000 to 3.69 mn, from a revised 3.87 mn the prior month that was weaker than initially reported. Gold has lost 19 percent this year amid expectations that the Federal Reserve will pare its $85 billion monthly bond-buying program as the economy improves. The Fed will taper asset purchases by $10 billion at its Sept. 17-18 meeting, according to a Sept. 6 Bloomberg survey, even after data that day showed U.S. employers added fewer jobs than estimated in August.
Gold prices could rise if the Federal Open Market Committee does not trim its bond-buying program as much as market consensus expects, says B of A Merrill Lynch Global Research, according to kitco.com. The firm says expectations are that the Fed will taper its asset purchases, known as quantitative easing, by $10 billion to $15 billion. That view is priced into the market. “If the Fed is more dovish than that, i.e., tapers by less or delays tapering entirely, gold prices could rally in the short term. Yet, gains will in our view be limited, partially because real rates should continue trend higher in the coming quarters,” they say.
Traders are also closely watching the debt ceiling debate in the US which has been postponed several times since the “fiscal cliff” debates earlier in the year. The US could default on its obligations as early as Oct. 18 if Washington fails to agree on legislation to raise the government’s borrowing cap, a new study predicted on yesterday. The Bipartisan Policy Center analysis says the default date would come no later than Nov. 5 and that the govt would quickly fall behind on its payments, including Social Security benefits and military pensions. This could drive uncertainty back into the market and push gold prices upwards.
Silver is trading at 23.178 gaining 16 cents correcting its major tumble this week as Chinese data continues to support the metals pack. Copper is trading in the green at 3.279, while platinum gained over $12 to trade at 1486.15 and palladium added almost $6.00 to trade above the $700 price level.