The U.S. involvement in war since September, 11, 2001; has increased its expenses. The U.S. has been involved in Afghanistan war since 2001 and Iraq since 2003. The total cost of the Afghanistan war on the U.S. is around $10.45 million and of Iraq war is $824328 with a total cost of $11.26 million. This amount cost about $60.71 million for Department of Defense during the fiscal year 2013. The roaring up of the issue of the Syrian war is estimated to cost around $500 million to $1 billion per month.

The recent data showed the improving U.S. economic conditions of increased Gross Domestic Product (GDP) by 2.5% in the second quarter and unemployment claims dropped by 6000 to 331000. This supports the strong dollar and rejuvenating U.S. economic outlook. As the U.S. Dollar is linked to most of the world’s other currencies, this improvement has appreciated its value respective to other currencies.

The Syrian war and its estimated consequences have hit hard the investors’ sentiments in the past two weeks. The U.K., the U.S.’s major allied other than France, has hauled its support to U.S. till UN’s inspector’s on-site judgment report appears. The U.S. too, is on a process to gain congressional authorization to get into Syrian war. Russia’s President Vladimir Putin, the supporter of Assad’s regime, is likely to support U.S. only when the U.N.’s report appears.

The increasing tension in the Syria and its possible Middle East impacts mainly the OPEC; due to U.S. intervention can deploy the oil supply in the international market. This will increase the oil prices.

Gold spot dropped by 1.6% on the market close on 28th August and gold for December delivery too dropped by 1.6% in the COMEX on New York. The updated news of China’s manufacturing Purchasing-Manager’s Index was 51.0 in August which showed the recovery of the Chinese economy. Also, the upcoming festival in China is likely to boost the gold demand. In addition, the world’s fifth largest gold producer, South Africa, is likely to hit by the strike starting from September 3 by the South Africa’s National Union of Mineworkers regarding the pay. This will too affect the gold supply.

The tapering of the Federal Reserve and the ongoing Syrian issue as a whole is likely to boost up the commodities demand, mainly the precious metals and oil. Regarding the precious metals mainly gold and silver is likely to be affected by the Fed’s policy whereas oil is hit by the geo-political tension in the Syria and its estimated consequences.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.