Gold Traders Uneasy – Spark Temporary Rally

  

                         Gold reacted quickly to Mr. Summer’s withdrawal of his nomination to head the FOMC. Gold climbed by $22.00 in the early morning session to trade at 1331.00. Exactly why a possible nomination is having such a huge market effect is an indication of the frayed nerves of commodity traders ahead of this week’s FOMC meet and possible taping. Syria weighed heavily on the markets over the last two weeks exhausting traders. Gold gained as the dollar dropped to the lowest level in a month after Lawrence Summers withdrew from consideration. Silver rallied from its worst week since June.

The U.S. and Russia held talks on a plan for Syria to surrender chemical weapons to avert a strike that could stoke Middle East tensions and announced a successful conclusion and a plan to move forward easing market tensions. The Federal Reserve is expected to announce its first move to taper its $85 billion in monthly bond buying when its two-day meeting ends Wednesday. While the Fed is seen curbing bond purchases by an initial $10 to $15 billion — a relative baby step compared to the massive amount of stimulus applied — it sends an important message that the Fed is moving toward a normalization of rates and expecting a more normal economy. While the Fed meeting in the week ahead tops the list, Congressional budget maneuvering and any developments on Syria will also get attention. The United Nations is expected to receive a report Monday which should show if Syria used chemical weapons on its citizens.

Silver is trading at 22.193 gaining 47 cents as the US dollar weakened to trade at 81.26 down by 42 points following cues from gold. The tonnage of silver bullion bars held by the US silver ETF increased around 30 tons or. 0.3 percent to 10,536.70 tons. Precious metals are expected to trade with a mixed note on the back of ease in concerns in QE tapering from Federal Reserve in its meeting during the week. The base metals pack on the LME traded on a negative note in the last week due to concerns regarding QE taper which could be announced in the FOMC meeting this week and mixed economic data from the advanced economies. However, weakness in the DX and decline in inventories prevented sharp decline in the base metals on the LME. Copper gained this morning as the US dollar tumbled. Copper prices on the LME slipped around 1.3 percent in last week and touched a low of $7024/ton on Friday. Prices declined during the later part of the week on the back of favorable economic data from US increased concerns of QE tapering from the Federal Reserve.

Further, decline in industrial production data from Euro Zone exerted downside pressure on prices. In the early part of the week, prices rose on account of positive economic data from Chinese economy. - Fxempire