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Gold Loses Bullish Momentum as Concerns for Syria Ease

August 31, 2013 at 1:02 by Vladimir Vyun

Gold ended Friday with losses, halting its previous rally. Why the metal has lost its bullish momentum? Because it has lost the bullish factor that was causing the rally: fear of a war in Syria. Previously, risk aversion was helping precious metals, but now Britain refused to attack and France also said that it is going to wait for the UN survey to determine if the Middle Eastern nation indeed used chemical weapons last week. Concerns about potential escalation of the conflict eased and so the bullish story for gold has ended.

While positive factors for gold are gone, the major cause for negativity remains in place: possible stimulus tampering by the Federal Reserve in September. The Fed policy makers meet on September 18 and traders speculate that the US central bank will reduce pace of its asset purchases. US macroeconomic data was good for the most part, supporting such outlook. The prospect for smaller stimulus is negative for commodities, including gold.

December futures for delivery of gold dropped $16.8 (1.19 percent) to close at $1,396.1 per troy ounce on COMEX.

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