Gold drops below $1,400, set for second straight monthly gain

Gold drops below $1,400, set for second straight monthly gain

NEW YORK, Aug 30 (Reuters) – Gold slid below $1,400 an ounce on Friday as the dollar rallied to a four-week high, with investors squaring positions at the end of the month and cashing in on a recent run-up ahead of a long U.S. holiday weekend.

Analysts said gold’s losses came mostly from month-end position squaring and profit-taking after prices on Wednesday reached their highest levels since mid-May. Investors remained poised for word on any U.S. military action in Syria.

Gold was on track for a 5.40 percent gain on the month and its second straight monthly increase. It briefly trimmed its decline in the afternoon as U.S. Secretary of State John Kerry made a case for a “limited” strike against Syria, but prices fell back to pre-speech levels before he finished his televised address. (Full Story)

President Barack Obama followed with his own remarks, telling reporters while he met with visiting leaders at the White House that the United States was still in the planning process for a response to Syria’s chemical weapons use in Syria, adding that he was looking at limited action. (Full Story)

“Gold was following crude, which was following Kerry. He started strong and didn’t finish strong. He didn’t say anything new,” said Paul Sacks, principal gold trader at Aurum Options Strategies in New York.

Spot gold XAU= eased 0.93 percent to $1,394.51 an ounce by 3:19 EDT (1919 GMT) after slipping to a session low of $1,392.06 an ounce. U.S. December gold futures GCv1 lost $18.10 an ounce to $1,394.8 an ounce, down 1.28 percent.

The precious metal slid below $1,400 an ounce early as the dollar rallied following soft euro zone economic readings.

“Gold is under pressure from a firm U.S. dollar and lower oil prices after the West debates whether to attack Syria,” Commerzbank analyst Eugen Weinberg said.

While tensions over Syria kept investors on edge, James Steel, chief precious metals analyst at HSBC in New York, said month-end book squaring and the upcoming long U.S. weekend was likely adding volatility to the market.

“Geopolitical rallies tend not to buoy the market unless there’s further deterioration. In this case, it would be military action,” Steel said.

As of Wednesday, the latest rally had lifted gold to a 3-1/2 month high of $1,433.31.

“The move higher in August was driven mostly by short-covering and opportunistic buying, which seems to have now run out of steam,” VTB Capital analyst Andrey Kryuchenkov said.

The U.S. dollar .DXY reached a four-week peak against a basket of major currencies as investors sought a safe-haven in case of a U.S. military strike on Syria. FRX/

Earlier, data showing the pace of U.S. Midwest business activity rose to 53.0 from 52.3 in July helped lift the dollar but pressured gold. The index for prices paid within the series rose to its highest since November, raising an inflation flag that fed expectations the Federal Reserve could soon taper its monetary stimulus. (Full Story)

In Hong Kong gold kilo bar premiums declined to $2.50 an ounce from $5 two weeks ago. Tokyo premiums fell to 50 cents from $1.50. Those in Singapore dropped to $1.50. GOLD/ASIA1

Silver XAG= was down 1.72 percent at $23.42 an ounce, for a monthly loss of 1.3 percent. Spot platinum XPT= rose to $1,517.24 an ounce and jumped 6.1 percent in August. Spot palladium XPD= fell 2.04 percent to $719 an ounce, down 0.9 percent for the month.

4:07 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT

SETTLE   CHNG  CHNG                       VOL

US Gold DEC   1396.10 -16.80  -1.2  1391.80 1411.50  123,980

US Silver SEP  23.463 -0.627  -2.6   23.385  24.015    2,299

US Plat OCT   1527.10   4.70   0.3  1510.20 1529.00    8,572

US Pall SEP    722.10 -15.65  -2.1   719.65  736.40      238

Gold          1394.56 -13.08  -0.9  1392.83 1410.91

Silver         23.440 -0.390  -1.6   23.410  23.980

Platinum      1516.74   3.04   0.2  1512.75 1525.00

Palladium      719.22 -14.76  -2.0   722.75  736.00

TOTAL MARKET              VOLUME          30-D ATM VOLATILITY

CURRENT   30D AVG  250D AVG   CURRENT     CHG

US Gold        132,961             187,132     25.48    1.39

US Silver       44,807              55,303     30.67   -0.67

US Platinum      9,168              12,489     23.37    0.00

US Palladium     4,527               5,353