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Gold Hits 3-Month Highs As Syria Tensions Stoke Safe-Haven Buying
24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013. PHOTO BY REUTERS/Shannon Stapleton.
By A. Ananthalakshmi
28/08/2013
SINGAPORE (Reuters) - Gold extended gains to a fifth straight session on Wednesday and climbed over 1 percent to its highest in more than three months, buoyed by safe-haven buying due to geopolitical tensions in Syria.
Silver tracked gold higher, gaining more than 2 percent to trade at its highest in more than four months.
The United States and its allies geared up for a probable military strike against Syria that could come within days and would be the most aggressive action by Western powers in the Middle Eastern nation's two-and-a-half-year civil war.
Stock markets in the United States and Asia fell on the developments, while oil prices hit six-month highs.
"When things get uncertain you will always see a bigger interest in gold," said Han Pin Hsi, global head of commodities research at Standard Chartered Bank in Singapore.
Spot gold climbed to $1,431.09 an ounce by 0621 GMT. The metal hit $1,433.31 earlier in the session, its highest since May 14.
Spot silver rose 2.3 percent to $25.02.
"We may be seeing a new trading paradigm setting in the next few days, one whereby investors sour on stocks and file back into commodities, with oil and gold likely being the two favourites in the group," INTL FCStone analyst Edward Meir wrote in a note.
Gold has lost about 15 percent of its value this year as investors shifted to higher-yielding equities on the back of strengthening U.S. economic data.
However, the metal has recovered about $240 an ounce, or more than 20 percent, since hitting a near three-year low of $1,180.71 in late June.
Inflows into SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have aided in boosting market sentiment. Holdings are near four-year lows but have risen in the last two weeks.
CENTRAL-BANK BUYING
Data from the International Monetary Fund on Tuesday showed that central banks continued to add to their gold reserves.
Turkey added the most by buying 22.5 tonnes of gold in July, while Russia's holdings topped 1,000 tonnes.
"Emerging market central banks will continue to accumulate gold as an important cornerstone to reserves, this is one of the factors that will continue to underpin gold demand in coming years," ANZ analysts said.
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