Now that Vladimir Putin has played most of his hand at the G-20 meeting, getting the Assad government to agree to placing its chemical weapons stockpile under international control, the Obama administration has to back down from unilaterally bombing Syria in the name of Qatari and Saudi gas pipeline interests.  This has gold seeing profit-taking today and threatening short-term support near $1350 per ounce.

The risk-off trade is back on with equities rallying and bonds selling off.  Gold, despite overall weakness in the USDX, is being hit by renewed Yen weakness as the favorite whipping boy of the Japanese political elites touched ¥100 again today.

Gold is in a fragile state right now since the most acute short-term supply stress indicators — GOFO rates — have normalized.  This has seen the return of selling gold during New York trading, by redeeming GLD ETF (NYSE:GLD) shares (which has seen outflows return with positive GOFO rates) and selling into Asian strength.

If there are any fears of these being a slow-down in Asian demand for gold thanks to a slight rise in price, look only to the net import numbers for China in July just published, another 116.4 tons through Hong Kong.

The $1350 region is an important one and could establish a floor underneath the paper gold market this week.  But, as of right now, the market feels heavy thanks to a very successful defense of $1400, which never occurred on a weekly closing basis, further reinforcing the idea that what happens on Friday in the gold market is more important than what happens in any other day of the week.