Gold traders are the most bearish since June as the threat of an imminent attack on Syria eased and speculation mounted the Federal Reserve will start curbing stimulus as the U.S. economy improves.
Fifteen analysts surveyed by Bloomberg expect prices to fall next week, seven were bullish and three were neutral, the largest proportion of bears since June 21. Gold rose (COMEX:GCZ13) as much as 5.4% since the alleged Aug. 21 chemical attack in Syria that the U.S. said the government should be held accountable for. Prices retreated to a five-week low today as the U.S. pursued a proposal that Syria surrender its chemical weapons.
Gold is set for the first annual drop in 13 years as faith in the metal as a store of value weakened and the Fed indicated it could buy fewer bonds. Goldman Sachs Group Inc. said tapering may spur more gold sales and Societe Generale SA advised selling bullion. Prices rose to a three-month high Aug. 28 on concern that strikes on Syria will disrupt Middle East oil supply and stoke inflation, increasing demand for gold as a hedge.
“With Syria there may be some volatility going forward but I doubt if it will have an impact unless you have huge escalation,” said Georgette Boele, a commodities strategist at ABN Amro Group NV in Amsterdam. “If the Fed doesn’t surprise majorly in one way or another and the sentiment improvement continues, there’s no reason to be in gold.”
The metal fell 21% to $1,319 an ounce in London this year and tumbled into a bear market in April. Prices slid as much as 9% since Aug. 28. The Standard & Poor’s GSCI gauge of 24 commodities added 0.3% this year and the MSCI All-Country World Index of equities gained 12%. The Bloomberg U.S. Treasury Bond Index lost 3.8%.
Oil futures (NYMEX:CLV13) fell 4.1% since reaching a two-year high on Aug. 28. U.S. President Barack Obama said Sept. 10 he was asking Congress to postpone the vote authorizing military action following a Russian-backed proposal to place Syria’s chemical arsenal under international control. Syria said it would abide by an international treaty banning the chemical arms.
There are signs bullion demand is already waning after prices jumped 12% from a 34-month low in June. Sales of coins and bars from Australia’s Perth Mint dropped 46% in August from July. The U.S. Mint sold 11,500 ounces of American Eagle gold coins in August, the least in six years and down from as much as 209,500 ounces in April.