Pending any major news for the rest of the week, gold is set to gain around 5% at the close of August. Recent news of the turmoil in Syria has given gold a boost over the past few days which pushed the price over the $1,430 per ounce mark. After this, gold curtailed some due to recent positive economic data. Here is a look at current news in gold.
Threats of war from the U.S. and other countries in Europe sent mild shockwaves through the commodities market during the week. Gold gained close to $20 per ounce in the early hours of Tuesday to hold strong throughout the day and then saw another leap in the early hours of Wednesday. Now on Friday as reports have come in that the U.S. may not be so quick to take action against Syria and gold has taken a small step back. For now, all eyes are on Syria and any reactions by other powerhouse countries.
Positive Economic Data
On Thursday the U.S. Labor Department reported that the amount of individuals applying for unemployment insurance benefits declined to a level not seen in six years. All the while, the GDP for the U.S. grew at an annual rate of 2.5% in the second quarter. This was more than double that of the first quarter.
This positive economic data has re-sparked expectations that the Federal Reserve will begin tapering the stimulus program in September. It seems any positive sign of the U.S. economy turning around further feeds the speculation that the Fed will indeed call for a tapering of the current quantitative easing program at the next meeting in September.
The Month Overall
Gold had another good showing this month. As in July gold fought through the $1,300 per ounce resistance mark, so it did in August break past the $1,400 per ounce mark. Throughout August gold was able to post its gains from negative economic data and now more recently the news from Syria. Next month’s gold performance will be tied to how the details surrounding Syria unfold.
A quote from a recent article by Bloomberg may have put it best: “It’s all fueled into the Syria crisis,” said James Moore, an analyst at FastMarkets Ltd. in London. “Oil’s been going up and adds to the inflationary concerns longer down the road and possibly that may feed into concern that high energy prices could derail growth. We’ve seen quite a big slowdown in the liquidation from the hot money that plowed into gold and which has now come out of it.”
For September, gold investors would be wise to pay attention to the turmoil in Syria and the next Federal Open Market Committee meeting scheduled for the 17th and 18th. These two factors will certainly have a large impact on gold.