Gold rises toward $1,400 after Russia says missiles fired at Syria

September 3, 2013 07:47 AM

Today’s AM fix was USD 1,391.25, EUR 1,056.06 and GBP 893.09 per ounce.  Yesterday’s AM fix was USD 1,391.25, EUR 1,052.46 and GBP 893.14 per ounce.   London’s PM fix was USD 1,392.25, EUR 1,054.49 and GBP 893.843 per ounce.

Yesterday the U.S. observed a national holiday and the COMEX was closed.

Gold, silver and Brent oil rose and European stocks declined after reports of missile launches in the Mediterranean. Russian radar detected two ballistic "objects" that were fired toward the Syrian coastline from the central part of the sea.

Gold in USD, 1 Day - (GoldCore)

Gold recovered from early losses and climbed toward $1,400 an ounce, after Interfax reported that Russia detected that two missiles had been launched. The missiles appear to be headed toward the eastern Mediterranean, RIA Novosti reported, citing comments Russian Defense Minister Sergei Shoigu made to President Vladimir Putin. 

The reports led to some safe haven buying of gold. Gold for immediate delivery rose 0.5% to $1,399/oz soon after the reports. 

The FTSE, DAX and CAC all fell by between 0.4% and 1% in volatile conditions as traders sought more information about the missile launches. Brent crude climbed 0.6% to $115.04 a barrel. At one point it surged 1.6% and reached a six-month high of $117.34.

The Russian embassy in Syria said there was no sign of a missile attack or of explosions in Damascus. The Ministry of Defense in London confirmed that the missiles were not British.

The Israeli military initially said it was "not aware" of any missile launch in the Eastern Mediterranean according to the Daily Telegraph. Reuters have just reported that Israel has now said that it carried out joint missile test with the U.S.

Russia earlier today had criticized the United States for sending warships close to Syria, saying the deployments would exacerbate tension as Washington prepares for a possible military strike.

Gold had edged down for its fourth consecutive day prior to the missile reports, while the U.S. dollar has reached a seven week high ahead of U.S. economic data that will help determine the state of the U.S. economy.

Gold in USD, 5 Year - (GoldCore)

Gold rallied from its low in June of $1,180.50/oz but has fallen from its three month high on Aug. 28 of $1,433.83/oz due to a delay of the U.S. military attack on Syria.

Gold has rallied 17% since the end of June as lower prices boosted demand, particularly in China and Asia. 

Gold looks set to rebound as spending cuts by producers and the closure of many increasingly costly mining operations leads to a further reduction in supply while aggregate global demand remains robust.

Geopolitical risk continues to be underestimated and the missile reports this morning underscore the importance of having an allocation to gold bullion.

About the Author

Mark O'Byrne is executive director of Ireland-based GoldCore.