Gold spiked on a fear trade last week after Secretary of State John Kerry announced that Syria had used chemical weapons against its own people and that the United States would consider a response.
Gold for December delivery at the COMEX division of the New York Mercantile Exchange was tumbling $22.10 to $1,367.90 an ounce. The gold price traded as high as $1,400 and as low as $1,364.70 an ounce, while the spot price was falling to $1,367.49.
"It seems like this talk about Syria is just taking the back burner," Phil Streible, senior commodities broker at RJO Futures, said in a phone interview from Chicago. "It seems like the U.S. completely has been ostracized on this deal; no one wants to get involved."As reports mount that President Obama and leaders of Congress are facing headwinds among Senate and House politicians of both major parties, gold prices have been relinquishing the gains priced in when markets expected at least a limited U.S. airstrike against Syria. In interviews with TheStreet on Aug. 30, traders warned that gold prices would plummet if politicians decided to avoid taking military action. Through midday trading, the yellow metal has receded more than 3.5% since last week's closing high. "There were traders who bought into the idea of owning gold prior to the conflict," said George Gero, precious metals strategist at RBC Capital Markets. However, if Obama, House Speaker John Boehner and Senate Majority Leader Harry Reid do rally enough support for U.S. action, downside pressure could remain. "Generally when you do have a major conflict, some gold is sold to finance a war," said Gero. Silver prices for December delivery were slipping 18 cents to $23.24 an ounce. Adding to pressure on gold was a pop in the U.S. dollar index, which was jumping 0.52% to $82.60. Gold mining stocks were mostly lower on Thursday. Shares of Agnico-Eagle Mines (AEM - Get Report) were dropping 4.3%, while shares of Barrick Gold (ABX - Get Report) were off 1.8%.