Escalating tensions with Syria lift gold, oil

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Associated Press

Posted on August 27, 2013 at 11:00 PM

Updated Tuesday, Aug 27 at 11:00 PM

Mounting tensions with Syria sent gold and energy futures sharply higher Tuesday.

Gold reached its highest price since mid-May and crude oil closed at an 18-month high.

Precious metals came back into favor as traders loaded up on safe-play assets. Traders tend to shift money into gold and silver when they are fearful of political instability and turmoil in other financial markets. U.S. forces are ready to strike Syria following that government's alleged use of chemical weapons in an attack last week.

The December contract for gold rose $27.10, or 2 percent, to $1,420.20 an ounce.

Peter Hug, global trading director with Kitco Metals, said in a note to clients that a looming fight in Washington over raising the U.S. government's borrowing limit, which will be hit in mid-October, could have "bigger potential to trigger buying" than the Syria showdown.

Silver also rose sharply. The September contract increased 64.1 cents, or 2.7 percent, to $24.651 an ounce. That's the highest price since mid-April.

Prices for industrial metals were mixed. Copper for September delivery edged up less than a penny to $3.33 a pound, October platinum fell $12.40 to $1,532.10 an ounce and September palladium rose $3.10 to $749.15 an ounce.

In energy trading, crude oil rose $3.09, or 2.9 percent, to $109.01 a barrel, the highest since February 2012. Traders worried that the showdown with Syria could escalate into a regional conflict that might disrupt the flow of oil from the Middle East.

Heating oil rose 8 cents to $3.17 per gallon, natural gas rose 2 cents to $3.57 per 1,000 cubic feet and wholesale gasoline rose 8 cents to $2.91 per gallon.

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