Sun, Apr 09, 2017 - Page 14 News List

Gold rallies on haven demand as US missiles hit Syria

Bloomberg

Gold rallied to the highest in almost five months after the US launched a missile strike against Syrian President Bashar al-Assad’s regime.

The metal was supported by a report that showed the US economy added fewer jobs than economists expected.

Spot gold climbed as much as 1.5 percent to US$1,270.87 an ounce in New York, the highest intraday since Nov. 10 last year, and broke through the 200-day moving price average, indicating upward momentum.

Bullion later pared gains as traders looked past the geopolitical situation and the flight to quality eased.

The decision to strike Syria marks a reversal for US President Donald Trump, who during his campaign faulted past US presidents for getting embroiled in conflicts in the Middle East.

US Secretary of State Rex Tillerson told reporters that “steps are under way” to mobilize a coalition to remove al-Assad, a Russian ally.

The US attack was condemned as an “act of aggression against a sovereign state” by Russian President Vladimir Putin.

“There’s clearly an element of risk aversion in the market, so you have buying of gold,” said Georgette Boele, a currency strategist at ABN Amro Bank NV in Amsterdam. The metal has been close to the 200-day moving average for some time and “needed something like this to break through.”

The US action followed a gas attack in Syria’s Idlib province on Tuesday.

Announcing the strike, Trump said: “There can be no dispute that Syria used banned chemical weapons.”

Syria has denied responsibility.

Miners were boosted by the rise in gold, with Randgold Resources Ltd climbing 4.3 percent in London, while AngloGold Ashanti Ltd, the world’s third-largest miner of the metal, climbed 3.8 percent and Gold Fields Ltd rose 6.3 percent in Johannesburg.

The US economy last month added 98,000 jobs, trailing the 180,000 median forecast in a Bloomberg survey of economists, a government report showed on Friday.

The employment data comes at the end of a week when strong private payrolls data and weak automaker sales gave conflicting signals on the strength of the US economy.

“We saw a further move higher on the disappointing payrolls number,” said Brad Yates, head of trading for Elemetal LLC, one of the biggest US gold refiners.

“You’ve got people doing safe-haven seeking. Gold broke through its 200-day moving average. That has some shorts covering and potentially a new leg higher,” Yates said.

Gold futures for June delivery rose 0.3 percent to settle at US$1,257.30 on the Comex. The contract is up 5 percent for the week. Gold has climbed 9.2 percent this year.

“The situation in Syria continues to deteriorate, with news of a US missile strike,” Australian Bullion Co chief economist Jordan Eliseo said in an e-mail. “It’s no surprise for gold to catch an immediate safe-haven bid.”

Other metals:

Silver fell on the Comex, while platinum increased and palladium declined on the New York Mercantile Exchange.

Iron ore with 62 percent content in Qingdao fell 6.8 percent to US$75.45 per dry tonne, entering a bear market after declining more than 20 percent from a Feb. 21 peak, according to Metal Bulletin Ltd.

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