Israel tested the strength and accuracy of its U.S.-funded missile tracking system amid speculation that the U.S. will attack Syria after the nation's suspected use of sarin gas against its own people on August 21 east of Damascus.
The longevity of economy-stimulating monetary stimulus measures in the U.S. remain in question. The globe's largest economy is set to release economic data about factory output on Tuesday, and economists forecast the data might demonstrate growth. That would be among data to sway the Fed to slow down stimulus measures.
"The market is very vulnerable to news, to rumors, to anything that's going to come out from the Middle East," head of currency and metal trading Bernard Sin with bullion refiner MKS SA in Geneva told the news source on Tuesday. "People looking for a safe haven will pump money into gold. The market will be very choppy."
At 9:55 a.m. on Tuesday, gold futures rose 0.95 percent, a $13.18 gain to $1,402.95 per troy ounce.
The precious metal slumped from its 90-day high last week when it fell from the price of nearly $1,434 per troy ounce. The prospect of a delay of the U.S. answering the chemical weaponry allegation against Syria was largely the reason for the loss of value.
'Difficult to predict'
One analyst told Reuters that challenges are in play regarding an accurate forecast for the precious metal.
"It is difficult to predict how the geopolitical situation will develop, but obviously this will be followed by the gold market, and if we have a massive crisis, prices will rise on the back of it," analyst Daniel Smith with Standard Chartered told Reuters on Tuesday.
The performance of bullion on Tuesday went in both directions. As the trading session began, gold futures were slumping but the precious metal then proceeded to track the upward drive of crude prices. The energy commodity benefited from China, the globe's second-largest economy, releasing stronger economic data.
Another factor playing into the price of gold is what lays ahead for the monetary stimulus plan deployed by the U.S. Federal Reserve, according to Reuters. There is a possibility that the body might make that decision and implement it later this month.
The Fed is slated to convene two days of meetings beginning September 17. Should the institution taper asset purchases, the dollar would grow stronger. And because the greenback and the precious metal typically perform the inverse of one-another, gold would continue its downward trend.
Either way, analysts and investors are sure to follow data released this week.
"Any data out of the United States this week is going to be pretty critical to the outlook of gold, and we are expecting a strong labor report, which encourages the idea of QE tapering," the Standard Chartered analyst told Reuters.
MarketWatch reports the stability of gold as of late has been a surprise to Commerzbank analysts.
The stronger economy and the world's reserve currency gaining steam as of late have not been as damaging to the precious metal, the analysts stated in a note on Tuesday.
They pointed to ongoing labor strife at mines in South Africa as being another factor that could help burden the price of the precious metal.
"So far, the gold price is holding its own fairly well despite the better economic data and firmer U.S. dollar," the analysts' note stated, according to MarketWatch. "It is finding support both from the ongoing geopolitical risks and from investors who had recently sharply increased their bets on climbing prices."
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