Bullion and Black Gold after taking a beating from the rising strength of the greenback got a big boost from the simmering crisis in Syria. Initially a unilateral military intervention from US and its allies in Syria seemed inevitable. But later, as the fears about a swift and decisive military strike on Syria started easing, the commodities market, especially Crude and Gold, lost their steam to rally further.

On Monday last week, Gold was trading higher at $1395.72 an ounce, with Gold for December delivery dropping slightly by 0.2% to $1,393.10 an ounce. US Crude oil advanced by $0.38 to $106.80 a barrel, while the Brent Crude rose by $0.11 to $111.15 a barrel. On Wednesday, Gold continued to post new highs as it reached $1,434 an ounce, its May 14, 2013. WTI Crude for October delivery soared to a high of $112.24 a barrel, its highest since May 2011.

Gold and Crude oil prices last week got a breather from a strengthening dollar, as speculations rose that the Fed might continue its monetary stimulus amid a string of poor US data. Oil fields in Libya resumed operation in full swing adding to the global crude supplies that kept the prices in check.

However, after a suspected chemical attack in Syria, fears of impending US allied military intervention put the commodities market in panic mode. According to US, the Assad regime in Syria is strongly suspected of using deadly chemical missiles in the suburbs of Damascus to quell dissension. This has enraged the US government that is planning a quick and decisive military strike in Syria with its European allies.

The mounting Syrian tensions on Wednesday fuelled the surge in Crude oil prices as concerns about possible disruption of crude oil supplies from Syria and the Middle East increased. A war in Syria will have geological risks for crude oil as shipping routes from Middle East will be severely affected. Also, the unrest may spread wide to other oil producing countries of the region. 

This escalating tensions in Syria over a military attack caused investors to scamper to safe heaven like Bullion to mitigate risks. Consequently, the gold prices climbed to a three month high on Wednesday. The U.S. Secretary of State John Kerry stated that US will hold Syria’s Assad regime responsible for using chemical weapons against its own people. The rising tensions about impeding Syrian war increased US treasury prices and drove investors away from stock markets prone to geopolitical risks.

On Thursday Gold for December delivery dropped by 0.4% to $1,412.90 an ounce. Meanwhile, the US Crude decreased by $1.63 to $108.47, after gaining by 4% for the past few days. Brent Crude too traded down by $1.42 at $115.18 a barrel.

On Friday weekend Brent crude slipped further by 77cents to reach $114.39 by 0436 GMT, while the US Crude for October delivery declined by $1.12 to $107.68 a barrel. Gold futures dropped by 1.3 percent to $1,394.30 in NYMEX, with the Spot Gold decreasing by 0.9 percent to $1,394.39.

Mirroring this trend Silver too declined by 1.6% to $23.75, with a 0.5% decrease in Platinum to $1,515.10 an ounce and a 1.2% drop in Palladium futures to $731.30 an ounce. On Monday this week Crude oil continued its decline as Brent futures hit a low $112.20 a barrel declining by more than $1. Whereas, the US spot Gold plunged to one week low to $1,379.44.

The concerns of an impending Syrian war with an allied US military attack started abating on Thursday. Also, the U.K’s House of Commons voted against Britain mounting a limited military strike against Syria, leaving US in the lurch. This has weakened the possibility of Syrian war for the meantime.

Now, shifting the focus onto economic fundamentals the US jobless claims decreased by 6000 to 331,000 compared to previous week’s 337,000. Also, the US Commerce Department revealed that the GDP rose impressively by 2.5% in the 2nd quarter, beating an expected 1.7% increase. This signaled at a strengthening US economy, increasing concerns about the Fed QE tapering in September. This pulled down the Bullion prices.

The EIA report revealed that crude inventories rose by 2.99 million barrels last week, to 362 million barrels easing any residual supply concerns. Also, the OPEC oil output climbed up in the backdrop of an impending Syrian war. Saudi Arabia increased its production levels by 150,000 barrels to 9.95 million barrels per day, its highest in past 24 years since 1989. This has left the market well supplied and dragged down the Crude prices.

Thus, with US economy posting upbeat data and Crude oil market flushed with supplies the commodities market will have a tough time rallying up, unless the Syrian war materialize soon.