Gold prices have hit a three-month high  in advance of possible US military action in Syria, now pending Congressional approval in a rare democratic intervention into US foreign policy with recent action in the gold futures pit looking particularly positive for the yellow metal.
Professional traders increased their net-long position by 34 per cent to 97,902 futures and options by August 27th, according to the Commodity Futures Trading Commission. Holdings of short contracts tumbled 37 per cent to 32,088, the biggest drop in 11 months.
Gold prices gained 6.3 per cent in August, and US equities fell the most in more than a year, as western nations debated a response to overwhelming video evidence of chemical-weapons use in Syria. That boosted concern about disruptions to Middle East oil supply that would raise energy costs and stoke inflation.
In such circumstances there is usually a flight to gold as the ultimate safe haven and as a hedge against inflation. It was no different this time. It was also a rebound from the recent sell-off. Bullion tumbled a record 23 per cent in the three months ended June amid mounting speculation that the Fed will end money printing this month.
But demand for jewelry, coins and bars will reach as much as 1,000 tonnes in India and China in 2013, despite the 10 per cent tax imposed on gold in India, says the World Gold Council.
Gold sales by the Austrian mint in Vienna expanded 79 per cent from January to July on a year earlier. Russia increased its gold reserves in July to the highest for 20 years, with Kazakhstan and Guatemala also buying gold.
Gold price outlook
Where next for gold? If the US Congress rejects military action in Syria like the UK parliament last week then the geopolitics of the Middle East may settle down and oil prices ease off. That would be negative for gold prices.
A more likely military strike  would send gold higher again. The winding down of money printing by the Fed would also be bad for the gold price, if it happens, although military intervention would make that less likely.
However, a big fall in US stock markets is the major unknown this autumn. If it happens then the gold price would also be pulled lower as it was in 2008. Many Wall Street indicators are flashing red so this remains a highly probably scenario, followed by a big rebound in gold prices as in 2009.
For contrarians then bullish professional gold traders could be a negative signal for prices in the immediate future.