BENGALURU: Gold prices edged down on Thursday after hitting an 11-week high in the previous session on technical selling and profit-taking, although concerns about possible US military action against Syria underpinned the bullion.
Spot gold was down 0.2 per cent at $1,350.59 (5,010.37) an ounce as of 0704 GMT after four straight sessions of gains. US gold futures fell 0.4 per cent to $1,354.10 an ounce.
The bullion touched $1,365.23 an ounce in the previous session, its highest since January 25, before trimming gains on expectations of a faster pace of US rate hikes following the release of minutes of the Federal Reserve’s last policy meeting.
“Gold prices on Wednesday were near the technical resistance level and, hence, we saw a sell-off from that point,” said Hareesh V, head of commodity research, Geojit Financial Services.
“Prices for the last several months are trying to break the $1,370 level, so there was some profit-taking as prices consolidated in the strong resistance region,” he said, adding that there was room for an upside as long as geopolitical tensions persist.
Gold is often used as a store of value during times of financial or political uncertainty.
“While we expect volatility to remain high, gold will stay supported so as long as US military option remains on the table, gold will continue bid,” said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.
“But we could see prices rocket higher if both the United States and Israel get drawn into the fracas siding with Saudi Arabia in Riyadh escalations with Tehran. A test of $1,400+ would be on the cards immediately.”
US President Donald Trump warned Russia on Wednesday of imminent military action in Syria over a suspected poison gas attack, declaring that missiles “will be coming” and lambasting Moscow for standing by Syrian President Bashar Al Assad.
Also underpinning bullion were lingering worries about a trade war between China and the United States.
On Thursday, China’s commerce ministry said that China will not hesitate to fight back if the United States escalates its trade spat with Beijing, asserting that Chinese President Xi Jinping’s pledge to cut import tariffs is not a concession to Washington.
Among other precious metals, silver was up 0.2 per cent at $16.66 an ounce, after hitting a near two-month high of $16.87 in the previous session.
Platinum gained 0.2 per cent to $928.20 per ounce and palladium fell 0.6 per cent to $959 per ounce.
Palladium, however, has surged over 6 per cent this week on the back of concerns that supply from top producer Russia could be hurt by sanctions imposed by the United States.