Precious Metals Ease As Industrial Metals Climb

Gold tumbled $5.20 this morning following a drop on Friday as tensions with Syria ease a bit. The United Nations vetoed an international intervention into Syria last week, followed by the UK Parliament voting down action by the British government. President Obama peddled back a bit over the weekend, keeping pressures on Syria, but the President has now decided to go to Congress for their support. US Secretary of State John Kerry continues to keep the pressure on Syria and the global community pushing the world community to do their duty. This morning a strong report from China, showing an uptrend in PMI manufacturing reporting above the 50 level helped support markets. Gold is trading at 1390.90 at this writing.

Trading remains light as European traders return to their office as the summer holiday ends but the US markets are shuttered today for the 3 day Labor Day holiday. Tuesday will be the first true trading day of the month.

Last week precious metals didn’t do much, which brings recent weeks’ rally to a halt.  The low trading volume and the anticipation of the next FOMC meeting could eventually lead to a reversal in the recent rally of bullion. Until then, the progress of the U.S economy may affect precious metals: If the U.S economy shows signs of progress, precious metals investors may consider translate these signs to higher odds for the FOMC tapering QE3 this year. During last week several U.S reports were published: GDP for the second quarter was revised up from 1.7% to 2.5%; jobless claims fell by 6k to reach 331k; consumer confidence remained virtually unchanged during August; new durable goods orders declined during the past month.

Gold prices closed lower on Friday, extending yesterday’s losses. Continued speculations of an early reduction in Fed’s asset purchase program weighed on metal prices. However, a halt in ETF sell-off for the second consecutive session yesterday gave some support to prices and limited losses. Persisting concerns that US Federal Reserve may start reducing its monetary stimulus later this year was also seen pressuring the commodity prices to certain extent in the global market.

Silver diverged from gold this morning gaining 42 cents to trade at 23.938 after the Chinese HSBC release supported the metals pack. Chinese Manufacturing Purchasing Index (PMI) rose to 51.0 when compared to the earlier estimates for a rise of 50.6 and previous index of 50.3, according to the data released by the China Logistics Information Centre on Sunday. Industrial metals prices fell to a three-week low on Friday, pressured by a stronger dollar and expectations that U.S. stimulus would be withdrawn starting next month, which could hamper growth and crimp the flow of money invested in commodities. Copper climbed this morning by 65 pips to trade at 3.304 helped by the Chinese data and overall market sentiment. Money managers cut their net long positions after worries about demand from top buyer China, the data for the week ending Aug. 27 released by the U.S. Commodity Futures Trading Commission showed.