Gold declines on receding Syria concerns, silver rallies on upbeat China data

Gold fell for a fourth day on Monday on easing concern over an imminent U.S.-led attack against Syria as President Barack Obama announced he will require Congresss approval for initiating military action. Last weeks U.S. data spurred speculation that the Federal Reserve might pare its monetary easing program in as early as September. Silver rebounded on upbeat China data.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery fell by 0.11% to $1 394.50 at 8:14 GMT. The metal fell for a fourth straight day and ranged between days high of $1 398.00 and low at $1 374.10 per ounce, the weakest level since August 23. Gold slipped 0.6% on Friday and settled the week 0.17% lower after adding 6.3% in the preceding two five-day periods.

The precious metal extended its decline as concern over an imminent U.S.-led attack against the Syrian regime eased after President Barack Obama announced he will seek approval by the U.S. Congress to initiate a punitive attack against Syria. This would delay any military action at least for nine days as the summer recess ends on September 9. The United States were initially expected to lead a swift strike backed by France and the U.K. but British lawmakers voted against Prime Minister David Cameron’s proposal last week to intervene in the the Syrian civil war.

Meanwhile, speculations that the Federal Reserve might begin tapering its $85 billion per month bond purchases continued to weigh on the market. Mixed data on Friday further fueled those expectations as the Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 82.1 in August from July’s six-year high of 85.1, but surpassed expectations for a drop to 80.5 and August’s flash reading of 80.0.

A separate report showed that the ISM-Chicago Business Survey marked an expansion in the economic activity of the region. The Chicago Purchasing Managers’ Index matched expectations for a rise to 53.0 in August from 52.3 in June. Levels above the neutral 50 level indicate expansion of the respective sector.

The Commerce Department reported that Personal Income rose by 0.1% in July, underperforming analysts’ expectations for a 0.2% increase and the preceding period’s 0.3% gain. Consumer purchases (Personal Spending), which account for around 70% of the economy, rose by 0.1% last month, mismatching projections for a 0.3% surge. June’s reading received an upward revision to a 0.6% advance from the initial 0.5%.

The agency also reported that Core Personal Consumption Expenditures rose by 0.1% month-on-month, down from 0.2% in June. The index marked a 1.2% advance on annual basis, matching the preceding period’s increase but underperforming expectations by 0.1%.

On Thursday, the Commerce Department reported that the U.S. economy grew more in the second quarter than previously estimated in July. The U.S. Preliminary (Revised) GDP marked a growth of 2.5% from a year earlier, compared to the flash reading of 1.7% published on July 31 and surpassing analysts’ expectations for a correction to a 2.2% advance.

Meanwhile, the Department of Labor reported that fewer people than anticipated filed for initial jobless payments last week. In the week ended August 24, U.S. initial jobless claims fell to 331 000, beating forecasts for a drop to 332 000 from the preceding period’s upward revised reading of 337 000 claims.

Sun Yonggang, a Shanghai-based macroeconomic strategist at Everbright Futures Co., said for Bloomberg: “As the issue of Syria subsides, the withdrawal of stimulus in the U.S. remains the top concern in investors’ minds, and that will weigh on gold.”

Silver surges

At the same time, signs of stabilizing economic activity in China supported the silver market as the country is the second-biggest consumer of the metal, which is widely used in the production of solar panels, jewelry and electronics. Silver for December delivery rose by 2.76% to $24.163 an ounce on the New York Mercantile Exchange at 8:10 GMT, snapping three consecutive days of declines. Prices held in range between days high and low of $24.405 and $23.118 per troy ounce respectively.

The Chinese National Bureau of Statistics reported on Sunday that the country’s manufacturing Purchasing Managers’ Index surpassed forecasts for a jump to 50.6 according to a Reuters poll and rose to 51.0 in August, the highest since last April, from 50.3 in July.

Meanwhile, according to a separate private survey by HSBC and Markit Economics, the HSBC Purchasing Managers’ Index posted a surge to 50.1 in August, marking a major improvement from July’s 11-month low of 47.7 in July and ending a three-month declining cycle. Chinese manufacturers signaled a slight expansion in growth that was based on improving market conditions.

Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: “The final reading of August’s HSBC China Manufacturing PMI recovered to 50.1, from an 11-month low of 47.7 in July. This implies that growth in China’s manufacturing sector has started to stabilize on the back of a modest rebound of new orders and output. This was mainly driven by the initial filtering through of recent stimulus measures and companies’ restocking activities. We expect some upside surprises to China’s growth in the coming months.”

Elsewhere on the precious metals market, platinum and palladium also advanced. Platinum October futures rose by 0.09% to $1 528.45 an ounce and held in days range between $1 534.40 and $1 512.45 an ounce. Palladium for December delivery traded at $728.30 an ounce at 8:10 GMT, marking a 0.61% daily gain. Futures ranged between days high and low of $730.60 and $722.30 per troy ounce respectively.