Oil, gold stay volatile on Syria tension

Written by fe Bureau | New Delhi | Updated: Sep 4 2013, 14:48pm hrs
Global crude oil and gold prices remained volatile in early trade on Tuesday after a missile test by Israel jointly with the US in the Mediterranean raised worries that an escalating Syrian conflict may disrupt supplies from the West Asian region.

Strong manufacturing and services data from China also brightened prospects for commodities.

After an initial fall, brent crude oil gained 74 cents at $115.07 a barrel.

US crude oil, however, dropped 33 cents to $107.32 from Friday's close as there was no Monday settlement for the US benchmark oil variety due to due to the Labor Day holiday.

Brent crude oil increased by more than $1 a barrel on geopolitical tensions after a Russian media report cited the country's defence ministry saying it had detected two ballistic "objects" fired in the Mediterranean. Israel later said it carried out a test of a missile, used as a target in a US-funded anti-missile system on Tuesday.

Spot gold also gained in intraday trade as its safe-haven appeal came to the fore again. Spot gold rose 0.40% to $1,395.26 an ounce, while US gold futures for December was little changed at $1,394.90.

The metal had hit a three-and-a-half month high of $1,433.31 an ounce on August 28 when a US strike on Syria seemed imminent. However, the precious metal lost some appeal after US President Barack Obama chose to seek congressional support for the war and the UK parliament rejected participation in any military action.

Investors are awaiting for the US manufacturing data, to be released later in the day, jobs data and greater clairty on the rollback of stimulus measures by the Federal Reserve to gauge if the economy is on a solid footing.

Commodities also got a boost after latest data revealed that China's manufacturing expanded for the first time in four months in August to 50.1 from July's 47.7, while non-manufacturing purchasing managers' index stayed almost steady at 53.9 last month, adding to optimism that the world's second-largest economy is recovering steadily, if not fast.