Gold settles lower as Syria tensions cool
Gold hit a three-week low on Wednesday, under pressure as speculation that a U.S. military strike against Syria could be averted dented the metal's safe-haven appeal.
U.S. President Barack Obama vowed on Tuesday to explore an initiative from Russia to neutralize Syria's chemical weapons, but he voiced skepticism and still sought support for his threat to use military force should diplomacy fail.
Spot gold fell earlier in the session to its lowest since Aug. 22 at $1,356.85 an ounce. It was recently trading flat at $1,363 an ounce, after losses of 1.6 percent in the previous session.
U.S. gold futures for December delivery settled $2.00 lower at $1,363.80 an ounce.
Analysts said Syria would probably now be less of a focus for the market as the U.S. Federal Reserve meeting on Sept. 17-18 takes center stage.
"The uncertainty around the timing and pace of the Fed tapering is currently putting pressure on gold prices and will continue to do so until the central bank disclose that information at its meeting next week," T-Commodity metal consultant Gianclaudio Torlizzi said.
The Fed's stimulus has been a driver in gold's rally in recent years, with the increased financial liquidity and record-low interest rates encouraging investors to put money into non-interest-bearing assets.
"The fact that the Syrian situation is all back to a diplomatic solution is something that is not really supporting gold or crude oil right now and the moves lower seen in the past sessions were merely due to that," Danske Bank analyst Christin Tuxen said
The positive correlation between gold and oil has been restored over the past month after political tensions heightened and a U.S.-led strike on Syria seemed imminent. Gold is seen as a hedge against oil-led inflationary pressures.
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