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Gold rises 1% as Syria strike seen likely

AP

Gold rose 1 percent to its highest price in more than three months on Tuesday, as investors sought safe havens from rising geopolitical tension, with an attack by Western powers on Syria seen imminent.

Western forces could attack Syria within days, the United States and its allies have told rebels fighting President Bashar al-Assad, opening up new risks in a war that is spreading hatreds across the Middle East.

"The possibility of U.S. military action against Syria is driving demand for safe-haven assets including gold," said Jeffrey Sherman, commodities portfolio manager at DoubleLine, an asset manager with about $57 billion in assets under management.

Bullion prices rose along with other safe havens such as U.S. Treasurys. Brent oil futures jumped more than 3 percent to about $115 per barrel, while U.S. equities, measured by the S&P 500 index, dropped nearly 1.5 percent.

U.S. home prices rose in June, but the pace of gains cooled, suggesting higher mortgage rates might end up slowing momentum as the year winds down. Recent disappointing U.S. economic data added to confusion over when the Fed might curb its bond-buying stimulus, which has kept U.S. interest rates near record lows and increased the allure of hard assets.

Spot gold rose 0.9 percent to $1,417.10, having earlier hit $1,423.41, which marked the highest since May 15. U.S. gold futures for December delivery settled up $27.10 at $1,420.20 an ounce.

Trading volume was at 156,000 lots, about 20 percent below its 30-day average, preliminary Reuters data showed.

Buying related to Comex September option expiry on Tuesday helped boost prices, traders said.

Buying sentiment improved after data from the International Monetary Fund showed Turkey, Russia and Azerbaijan increased their gold reserves in July as bullion prices recovered from near three-year lows.

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Price
 
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%Change
Volume
GOLD
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SILV/USD
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SILVER
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