Gold price down as solution to Syrian crisis shapes

With a diplomatic solution to the Syrian crisis having taken more shape last week, there are few supporting factors which could prevent gold prices from falling further, said Gerhard Schubert, the head of commodities at bank Emirates NBD, on Saturday. Gold finished on Friday at 1,327.50 U.S. dollars per ounce, down 4.5 percent week on week. A Russian initiative to put Syrian chemical weapons under international control, which reduced the possibility of a potential Unites States military strike against Syria, had a softening impact on gold "and the market went into long liquidation mode," said Schubert in his weekly commentary on global markets. The price of gold temporarily even touched 1,306 U.S. dollars and the following mini-recovery to 1,327.50 U.S. dollars "was nothing more than day traders taking some money off the table before the weekend," Schubert added. Regarding the outlook for the yellow metal, Schubert said all eyes would now focus on the United States' Federal Reserve and to which degree it would reduce monetary easing as the world's biggest economy regained momentum. "It appears that a lot of market participants are expecting more tapering from the FOMC (federal open market committee) meeting next Wednesday than the number of 10 billion U.S. dollars, which looks like to be the median expectation," said Schubert. More tapering would lead to higher interest rates and slightly lift the price of gold after the FOMC meeting. Physical selling due to the downfall of the Rupee in India, the world's biggest consumer of gold, mitigated upwards momentum recently, "But this picture is beginning to change now, with the strengthening of the Rupee and the falling prices in U.S. Dollar terms. The Rupee exchange rate to the greenback improved during the week from around 65 to one to 63.5 to 1, the highest close since Aug. 23 after the Reserve Bank of India announced counter-measures to stop the slump of the currency.