Picture: ISTOCK
Picture: ISTOCK

London — Gold steadied on Monday, surrendering gains made in earlier trade as a result of this weekend’s air strikes on Syria, as financial markets wagered the latest US-led intervention would not escalate into a wider conflict.

A retreat in the dollar kept the metal firmly underpinned, however.

Prices have trended sideways since January, buoyed by geopolitical concern but capped by the expectation of further US interest rate increases and strong technical resistance at $1,360/oz-$1,365/oz, their January, February and April highs.

Spot gold was at $1,344.34 an ounce at 9.30am GMT, little changed from late on Friday but off an earlier peak of $1,348.69. US gold futures were 0.1% lower at $1,346.80 an ounce.

Forces from the US, UK and France pounded Syria with air strikes early on Saturday, hitting three of Syria’s main chemical weapons facilities.

However, investors shed safe-haven assets and oil prices plummeted on Monday on expectations the attacks would not mark the start of greater Western involvement in the conflict.

"Some of the risk [premium] has come down following the air strikes," Capital Economics analyst Simona Gambarini said.

"Some market participants were thinking that maybe there could be an escalation of the tension, but that has not happened and therefore prices have come down a bit.

"If you consider that the Fed [Federal Reserve Bank] is tightening we should see lower gold prices. Instead, they have been moving sideways," she said.

"There is certainly some risk premium incorporated into prices … but there is no trigger for higher prices at the moment."

Speculators raised their net long positions in Comex gold contracts by 363 contracts to 138,212 contracts in the week to April 10, US Commodity Futures Trading Commission (CFTC) data showed on Friday.

Gold remains under pressure, however, after failing to break through chart resistance last week, dealers said.

"On Wednesday we had that breakout above $1,360 and it just went nowhere afterwards. That was really, really disappointing," ING analyst Oliver Nugent said. "The money is just waiting on the sidelines."

Dealers trimmed their short positions in silver by 3,187 contracts to 36,417 contracts, commission data showed.

Silver was down 0.1% at $16.61 an ounce, while platinum was flat at $927.30 an ounce.

Palladium was 0.2% higher at $988.70 an ounce after hitting a three-week high of $990.50 on Friday.

Prices rose 9.6% last week, their biggest weekly gain in more than a year, as concerns that supply from number one producer Russia could be disrupted by US sanctions fed into a strong technical rebound following the metal’s 20% fall from its January record high.