Gold Ends Sharply Lower As Syria Concerns Fade

(RTTNews) - Gold futures snapped a two-day gain to end sharply lower on Tuesday, with investors opting for the riskier equity assets after fears of a possible military strike against Syria waned following reports the beleaguered country may agree to a Russian proposal to hand over control of its chemical weapons arsenal to an international agency.

Efforts to settle the Syrian crisis seem to be bearing fruit, with the latest proposal by Russia that Syria handover its chemical weapons for destruction finding favor with major players. The efforts could considerably ease tensions surrounding Syria.

After a meeting with his Russian counterpart, Syrian Foreign Minister Walid Moallem told reporters that Syria "welcomes" the Russian initiative but stopped short of saying that the government had actually accepted the proposal.

"The Syrian Arab Republic welcomes the Russian initiative, motivated by the Syrian leadership's concern for the lives of our citizens and the security of our country," Moallem said.

Meanwhile, a string of positive data from China suggest the world's second largest economy may have started to recover in the third quarter, shrugging off the recent weakness -- largely attributed to the ongoing restructuring. After some strong data on trade and inflation, China reported better than expected retail sales, industrial production and fixed asset investment.

Gold for December delivery, the most actively traded contract, plunged $22.70 or 1.6 percent to close at $1,364.00 an ounce Tuesday on the Comex division of the New York Mercantile Exchange.

Gold for December delivery scaled an intraday high of $1,391.40 and a low of $1,357.60 an ounce.

Gold futures ended slightly higher yesterday, after the dollar weakened against some major currencies following some disappointing U.S. jobs data last week and easing concerns of any immediate tapering of the Federal Reserve's quantitative easing program.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.86 on Tuesday, up from 82.81 late Monday in North American trade. The dollar scaled a high of 81.98 intraday and a low of 81.72.

The euro traded higher against the dollar at $1.3268 on Tuesday, as compared to its previous close of $1.3254 late Monday in North America. The euro scaled a high of $1.3275 intraday and a low of $1.3232.

In economic news, data from China's National Bureau of Statistics on Tuesday showed industrial production to have increased 10.4 percent year-on-year in August compared with forecast of 9.9 percent growth. This was the strongest growth recorded in 17 months. In July, output grew 9.7 percent.

Meanwhile, China retail sales were up 13.4 percent annually in August, better than the 13.3 percent increase expected by economists. This followed the 13.2 percent rise in the previous month.

The statistical office also reported that China's fixed asset investment rose 20.3 percent in the January-August period compared with the same period last year. This was slightly higher than the 20.2 percent increase forecast by economists. For the first seven months of the year, investment showed 20.1 percent growth.