PRECIOUS-Gold hits 3-week low as easing Syria tensions dent safe-haven appeal
* Gold to test support at $1,352-technicals
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(Adds analysts' quotes, updates prices) SINGAPORE, Sept 11 (Reuters) - Gold slipped to a three-week low on Wednesday before recovering on bargain hunting, but the precious metal was losing its safe-haven appeal for investors on hopes a U.S. military strike against Syria could be averted. Syria has accepted a Russian proposal to give up chemical weapons but U.S. President Barack Obama said it was too early to tell if the initiative would succeed, vowing to keep military forces at the ready to strike if diplomacy fails.
Gold, which has fallen more than 18 percent this year, is also being hurt by expectations the U.S. Federal Reserve will opt to taper its monetary stimulus programme after the Fed's Open Market Committee meeting on Sept. 17-18. Spot gold hit a low of $1,356.85 an ounce, its weakest since August 22, and was steady at $1,364.01 by 0343 GMT. The Fed's three quantitative easing schemes have buoyed prices of gold and other commodities. "It's really a confluence of three things," said Mark Keenan, a cross-commodity research strategist at Societe Generale in Singapore. "Currency weakness, specifically in India, the tapering that we believe will be announced in (FOMC) meeting, and a slight deterioration in the requirement of having a safe haven in the light of these strikes in Syria possibly being averted." U.S. gold was little changed at $1,364.20 an ounce.
Asian shares rose on Wednesday, on track to post their 10th straight day of gains, while investors gave the safe-haven yen a wide berth as optimism for the Chinese economy grew and worries about U.S. military strikes on Syria receded. U.S. crude for October delivery was down 54 cents at $106.85 a barrel. "Over the days ahead, we likely will see various markets continue to breathe a bit easier, meaning that the crude oil markets will likely remain very vulnerable to more downside pressure," said Edward Meir, an analyst at INTL FC Stone. "Although gold may decline in sympathy as well, we think it is in store for a much larger break once the Fed announces its tapering decision next week." The physical market has yet to pick up in Asia and other regions even though gold has fallen below the psychological level of $1,400 an ounce. In top consumer India, a sharply lower rupee curbed buying interest despite an approaching festival. "Physical buying is very price-sensitive, and the bulk of the buying was seen more towards the $1,300 level. One of the main things which we've seen contributing to the decline in the physical buying has been the weakness in the rupee," said Keenan of Societe Generale. India's gold demand picks up between August and October, when consumers buy bullion to celebrate festivals, peaking with the Diwali festival of lights which falls in November this year. Gold is one of the biggest items in a record current account deficit that has helped push the rupee to an all-time low. The government has raised the import duty on gold to an all-time high of 10 percent.
Precious metals prices 0343 GMT
Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1364.01 0.42 +0.03 -18.54 Spot Silver 22.99 0.05 +0.22 -24.08 Spot Platinum 1476.24 8.64 +0.59 -3.83 Spot Palladium 696.22 4.71 +0.68 0.61 COMEX GOLD DEC3 1364.20 0.20 +0.01 -18.59 17715 COMEX SILVER DEC3 23.03 0.01 +0.06 -24.01 7497 Euro/Dollar 1.3265 Dollar/Yen 100.47
COMEX gold and silver contracts show the most active months
(Editing by Muralikumar Anantharaman)