Gold dipped a bit this morning giving up just under $8 to trade at 1378.80 as global tensions took an unexpected turn on Monday. As the US congress returned to Washington to begin the debate on military intervention in Syria a surprise offer from Russia hit the news. President Obama was scheduled for a week of live press coverage working the public for support to strike Syria. John Kerry spent the weekend visiting leaders from around the globe mustering support and backing after the UN and the G20 showed little interest in military action. Gold prices fell as concern about the Syrian conflict escalating eased after President Bashar al-Assad’s government welcomed a Russian proposal to place its chemical weapons under international control. The suggestion comes a day before US President Barack Obama is scheduled to present an Oval Office address seeking support for American military action to oust Assad.
Gold eased as traders once again looked towards the FOMC next week. The dollar index, which measures the greenback against a basket of six currencies, extended its decline from Friday when a report showing weaker than expected jobs data fuelled uncertainty about whether the Federal Reserve will start tapering its stimulus.
Silver’s decline was limited as strong data from China helped support the demand for industrial metals. Silver tumbled to 23.385 when just a week ago silver was at the $25 level. China over the weekend reported strong exports during August, at up 7.2% on an annualized basis. Strong Chinese import levels for August were also reported, at up 7.0% year on year.
Consumer inflation in China rose 2.6% in August, year on year, which was in line with expectations. China industrial production figures are due out Tuesday. There was also strong GDP data coming out of Japan Monday. The upbeat Asian economic data is a bullish underlying factor for the precious metals markets.
Copper, the metal used in power and construction, was lifted by data from China that reinforced expectations of a rebound in demand for metals from the world’s largest consumer. Copper gained on Monday but gave back those gains on Tuesday morning as commodities turned to the red. Copper is trading at 3.257 down by 24 points as traders took positions before Chinese data due shortly.
Chinese data is expected to show a climb in retail sales and industrial production which will be supportive of the commodity currencies along with the overall commodities market. As tensions in the Middle East ease, traders will be closely watching economic data for clues. Many traders sold off metals to book profits after political tensions pushed the prices higher.