(For more on the gold bear market, see EXT5.)
Sept. 10 (Bloomberg) -- Gold fell the most in two months as Secretary of State John Kerry said the U.S. will explore a Russian plan to eliminate Syria’s chemical weapons in a bid to diffuse a potential military strike. Silver dropped 3 percent.
Senate Majority Leader Harry Reid said diplomatic efforts to persuade Syria to surrender its chemical weapons should be given time to work, and a bipartisan group of senators is drafting an alternative to the proposal authorizing a U.S. military strike. Gold also dropped on speculation that the Federal Reserve will cut U.S. monetary stimulus soon, eroding the metal’s appeal as an alternative investment.
“The gold price has come under pressure in response to the latest signs of de-escalation in the Syrian crisis,” Commerzbank AG in Frankfurt said in a report. “The possibility of the Fed already scaling back its bond purchases following the Federal Open Market Committee’s meeting next week has also not been excluded, which would weigh on the gold price.”
Gold futures for December delivery slid 1.6 percent to close at $1,364 an ounce at 1:54 p.m. on the Comex in New York, the biggest drop for a most-active contract since July 5. The metal has slumped 19 percent this year.
On Aug. 28, the price reached a 15-week high of $1,434 as the U.S. indicated it would attack Syria for using chemical weapons against civilians.
The rebound is over, partly because of easing Syrian tensions, and prices may drop to $1,200 by the end of this year, Societe Generale SA said today in a report. “Strong” sales of exchange-traded funds backed by the metal probably will resume soon, the bank said.
Silver futures for December delivery fell 70.1 cents to $23.016 an ounce on the Comex. The price has tumbled 24 percent this year. On the New York Mercantile Exchange, platinum futures for October delivery declined 0.6 percent to $1,474.10 an ounce. Palladium futures for December delivery rose 1.4 percent to $692.65 an ounce.
--Editors: Patrick McKiernan, Millie Munshi