Gold hits 11-week high on Syria worries, stimulus hopes

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US gold futures for December delivery climbed $18.50 to $1,411.60 an ounce. AP US gold futures for December delivery climbed $18.50 to $1,411.60 an ounce. AP
SummaryUS gold futures for December delivery climbed $18.50 to $1,411.60 an ounce.

Gold hit an 11-week high on Tuesday, bolstered by safe-haven buying on geopolitical tensions as the West edged towards possible military action against Syria, while strong support came from hopes of prolonged US monetary stimulus.

The United States signalled on Monday possible military moves against Syria over a chemical weapons attack in Damascus suburbs for which it said it believed President Bashar al-Assad was responsible.

"Geopolitical tensions in Syria are one of the factors which will be supporting gold prices in coming sessions," Natixis analyst Nic Brown said.

"And you also have the latest data out of the United States over the past couple of sessions that was relatively weak and raised the question mark over the timing of the U.S. Fed tapering," he added.

Spot gold rose to its highest since June 7 at $1,412.30 an ounce earlier and was trading at $1,411.50 by 0950 GMT, up 0.5 percent.

US gold futures for December delivery climbed $18.50 to $1,411.60 an ounce.

The dollar fell against safe-haven currencies but remained broadly steady, while European shares dropped as unease about the threat of a military strike against Syria prompted investors to cash in on recent strong gains.

US TAPER DEBATE SUPPORTS

Gold has gained more than 6 percent this month and almost 19 percent from its year low of $1,180.71 hit in late June.

Recent US data on industrial production, new home sales and durable goods orders has suggested economic growth this quarter will probably not accelerate as much as economists had hoped.

Traders believe the weak data could deter the Federal Reserve from tapering its stimulus as soon as next month. The Fed's $85-billion-a-month bond purchases have helped drive increased liquidity towards gold and other commodities.

An early end to stimulus could hurt gold by drawing investors away from non-interest-bearing assets.

"A lot of people think it is still going to happen in September but if the Fed was going to delay that, then that is clearly supportive for gold prices," Brown said.

Data due later in the day from the United States includes the Case-Shiller house price index, consumer confidence and the Richmond Fed survey.

Dealers said physical demand in Asia remained subdued due to a seasonally weak summer period and the recent jump in prices.

Premiums of Shanghai gold futures to London prices have fallen to about $18 an ounce from last week's levels above $20.

India is considering asking gold traders to provide proof of payment for their jewellery

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