Oil price slide continues as chance of Syria strike lessensOil fell for the third day as the threat of military strikes in Syria receded.
U.S. Secretary of State John Kerry joined top French and U.K. diplomats in calling for a United Nations resolution to eliminate Syria’s chemical arsenal.
The Fed’s Federal Open Market Committee meets this week, when members are expected to cut monthly bond buying by $10 billion to $75 billion. And a U.S. government report is expected to show the annual increase in the cost of living slowed in August.
“The Syrian situation is contributing to these softer prices,” said Michael McCarthy, chief market strategist at financial derivatives dealer CMC Markets in Sydney. “It’s quite clear now that we have a path out of the current dilemma.”
West Texas Intermediate crude fell to $105.77 a barrel, headed for the lowest settlement since Aug. 22, and Brent crude futures dropped 0.4 percent to $109.62. Contracts on natural gas rose 0.6 percent.
Oil also dropped after Libya restored about 25 percent of its crude output following talks between the government and striking workers, while export terminals in Mexico reopened as Hurricane Ingrid weakened to a tropical depression.
Gold swung between gains and losses as investors weighed the outlook for U.S. stimulus.
Bullion for immediate delivery rose 0.1 percent to $1,314.51 an ounce at 2 p.m. in Singapore after losing and gaining at least 0.3 percent. Prices fell to $1,303.43 Monday, the lowest since Aug. 8. Gold for December delivery declined 0.3 percent to $1,313.90 an ounce on the Comex.
Gold has dropped 22 percent this year as investors lost faith in the metal as a store of value as equities rallied and on speculation the Fed may slow the pace of its bond purchases.
Price volatility will be driven by the central bank meeting, according to Goldman Sachs Group, which remains neutral on prices to the end of the year.
“Our U.S. economists’ expectations for a ‘dovish’ taper and gold’s recent decline will likely limit the downside to gold prices heading into the September FOMC,” Goldman analysts Damien Courvalin and Jeffrey Currie said in a report.
Gold will resume its decline heading into 2014 on expectations economic data will confirm an acceleration in U.S. growth and require a less accommodative monetary policy, according to Goldman, which maintained its forecast for prices to reach $1,050 at the end of next year.
Bullion rose 70 percent from December 2008 to June 2011 as the U.S. central bank pumped more than $2 trillion into the financial system by buying debt.
“The precious metals as well as the broader financial markets are waiting the results of this week’s FOMC meeting,” and details on the pace and time of possible tapering, said James Steel, an analyst at HSBC Securities (USA). Gold will “be impacted by the scale and timetable of any tapering.”
Silver for immediate delivery gained 0.4 percent to $21.908 an ounce. Palladium rose 0.2 percent to $705.65 an ounce, while platinum advanced 0.3 percent to $1,439.70 an ounce.