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Gold falls after 5-day rise as Syria attack fears ease

Thursday, 29 Aug 2013 | 2:59 PM ET
AP

Gold fell about 1 percent on Thursday, snapping a five-day rally on fading fears that U.S.-led forces would soon launch a military strike on Syria, as investors turned attention to strong U.S. economic growth and the Federal Reserve's plans to rein in its bond buying.

President Barack Obama told Americans on Thursday that a military strike against Syria was in their interest following a gas attack last week, and Britain said armed action would be legal, but intervention looked set to be delayed until U.N. investigators report back.

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A U.S. government report showed the nation's economy accelerated more quickly than expected in the second quarter due to a surge in exports, bolstering the case for the Federal Reserve to wind down a major economic stimulus program.

"Gold is down on better GDP and as the risk of imminent military strikes is fading," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC. "The market can sell off pretty hard tomorrow if we don't hear anything concrete about attacks on Syria."

The metal's appeal as a hedge against inflation decreased after the GDP data. Before Thursday's drop, gold rallied 5 percent in the last five sessions as rising geopolitical tensions boosted safe-haven bids.

Spot gold was recently down 0.4 percent to $1,411 an ounce. The metal is on track for its fourth consecutive weekly gain and its second straight monthly rise.

U.S. gold futures for December delivery settled $5.90 lower at $1,412.90 an ounce. Trading volume was about 30 percent below its 30-day average, preliminary Reuters data showed.

--By Reuters.

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