London: Gold edged below $1,400 an ounce on Monday as a delay in possible US military action in Syria and improved economic data from China and Europe boosted the appetite for riskier assets, reducing its appeal as a safe haven.

But silver gained around 3 per cent, benefiting from strong economic numbers in China, where the manufacturing sector posted its best performance for more than a year in August.

“The main supporting factor for silver has been the China PMI (purchasing managers’ index), which aids the more industrial precious metals as well as copper,” Societe Generale analyst Robin Bhar said.

“Also, the easing intentions of Obama wanting, like the UK, the Congress to vote on the possible Syrian attack has seen the safe-haven bid come off, helping other financial markets and certainly silver, which is for the moment outperforming gold.” Spot gold was down 0.2 per cent at $1,392.84 an ounce by 1010 GMT, after falling to a one-week low of $1,374.10 earlier. Prices were on track for a third day of declines.

Traders said volumes were likely to thin throughout the day, because the US market is closed for the Labour Day holiday.

US President Barack Obama said he would seek congressional authorisation for punitive military action against Syria, almost certainly delaying any strike until Washington’s summer recess ends on September 9.

European shares gained as much as 1.5 per cent, while oil prices fell for a third consecutive session.

The positive correlation between gold and oil has risen in the past few sessions as gold is seen as a hedge against oil-led inflationary pressures.

Gold last week rose to its highest since mid-May at $1,433.31 after news of a possible strike against Syria, but gave up some gains after British lawmakers voted against any involvement.

 

Fed tapering

 

September is a significant month for gold. Many economists expect the US Federal Reserve to decide whether to begin tapering its commodity-friendly stimulus measures this month.

The central bank is scheduled to commence a two-day policy meeting on September 17.

A scaling back would hurt prices. The metal has been boosted by central bank liquidity over the past four years.

Investors are scrutinising economic data to gauge the strength of economic recovery and predict when the Fed is likely to start curbing its $85 billion per month bond-buying programme.

The focus will be on major central bank meetings throughout the week and a series of crucial US economic data, culminating in the most important on Friday — the payrolls report.

“Market players ... hope that the (US labour market report) will give them some indication of when the US Federal Reserve may begin reducing its bond purchases,” Commerzbank said.

Silver was up 2.8 per cent to $24.10 an ounce. The gold/silver ratio was at its lowest since mid-April at around 57.70, compared with a three-year high of 67 at the end of July.

Spot platinum rose 0.5 per cent to $1,523.49 an ounce, while spot palladium gained 0.4 per cent to $721.50 an ounce.