Markets Shift To Risk Off Mode Pushing Gold Higher

There were three factors weighing on the markets today. These were concerns of military action in Syria, political uncertainty in Italy and tapering concerns in the U.S. There are so many reasons not to get involved in the markets that compounded with the European vacation season at its height and the US long summer weekend most traders are just moving to the sidelines. If you’re an investor you are either going to sit it out or take money off the table or move to safety. Risk off mode seems to dominate the markets with gold soaring to trade above the 1420 price on Tuesday. Gold saw a gain of over $25 as traders moved to safe havens and gold has been the favorite of traders. The US dollar has stabilized at 81.21 while crude oil continues to climb to trade at 111.70. The yen held its biggest gains in 2 1/2 months against the dollar and euro as traders sought haven investments amid escalating tension in Syria. Japan’s currency reached its strongest level in two weeks against the greenback, and the Swiss franc touched the highest in a week

U.S. markets also traded lower and most Asian markets slid this morning, amid worries over the recent escalation of the Syrian crisis. U.S. Secretary of State John Kerry said late Monday that there can be no doubt Bashar al-Assad’s government used chemical weapons against rebels, calling the action “inexcusable.” Syria’s decision to allow United Nations inspectors came too late, and U.S. President Barack Obama will now decide how to respond, Kerry said.

Gold climbed to highest since May as political tension over Syria increased demand for precious metal as a store of value. Silver also benefited from the demand for precious metals to climb to trade at 24.70 climbing steadily since the beginning of the week. Taking cues from rise in gold prices along with weakness in the DX, silver prices rose around 0.8 percent yesterday. Additionally favorable economic data from US and Euro Zone supported an upside in prices. Industrial metals prices fell yesterday on international bourses as signals of stabilization in top consumer China were offset by worries over the potential tapering of the U.S. stimulus program, while a potential western strike on Syria made investor bets more cautious. Copper lost 0.6 percent on the LME due to weak market sentiments. Additionally, increase in inventories by more than 2 percent exerted downside pressure on prices. Copper is trading at 3.341 gaining 9 points this morning. Venezuela is hiking prices for its metals and minerals exports in an effort to obtain a “fair price” from buyers, but traders warned the move could leave the OPEC nation without buyers for its most important non-oil exports.