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PRECIOUS-Strong U.S. data topples gold from three-month highs
February 9, 2017 / 9:08 PM / in 8 months

PRECIOUS-Strong U.S. data topples gold from three-month highs

    * Strong U.S. data boosts dollar and bond yields
    * Record German trade surplus adds to political risk
    * SPDR Gold holdings rise for sixth straight session
    * Platinum touches three-month high

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Peter Hobson
    NEW YORK/LONDON, Feb 9 (Reuters) - Gold slipped on Thursday
from a three-month high in the previous session after robust
U.S. economic data pointed to a stronger economy, increasing the
likelihood that the Federal Reserve will raise U.S. interest
rates.
    The data showing rising U.S. wholesale inventories and an
unexpectedly low number of Americans filing for unemployment
benefits also pushed up the dollar        and U.S. bond yields
           .                          
    A stronger dollar makes gold more expensive for holders of
other currencies, while higher yields increase the opportunity
cost of holding non-yielding bullion. Higher interest rates
would lift yields further.
    Spot gold        was down 0.85 percent at $1,231.03 an ounce
by 3:53 p.m. EST (2053 GMT), while U.S. gold futures        
settled down 0.2 percent at $1,236.80. 
    "If people were betting on the Fed being more relaxed and
rates being lower for longer, this (data) has muddied that
picture," said Robin Bhar at Societe Generale. 
    Still, Chicago Fed President Charles Evans, a voter on
policy this year, told reporters it is reasonable to expect the
Fed to raise rates three times this year.              
    With gold striking $1,244.67, its highest since Nov. 11, on
Wednesday, some investors had turned cautious and were cashing
in their bets on higher prices, Bhar said.  
    Gold has risen about 10 percent from a mid-December low as
political risk in Europe and the United States has driven demand
for bullion as a safe haven.
    Those worries were fueled on Thursday by official data that
showed Germany's trade surplus climbed to a record high in 2016,
setting the scene for conflict between Berlin and Washington
after Trump's top trade adviser last week accused Berlin of
exploiting a "grossly undervalued" euro to gain trading
advantage.             
    "Concerns about a possible trade and currency war therefore
seem justified and are likely to keep demand for gold at a high
level," said Commerzbank in a note.
    Adding support to prices, SPDR Gold Trust, the world's
largest gold-backed exchange-traded fund, increased its bullion
holdings for a sixth day on Wednesday.          
    "We see gold as relatively underpriced, given the rally in
commodities and high level of political uncertainty," said Hamza
Khan at ING.
    In other precious metals, platinum        was down 0.2
percent at $1,012.99 an ounce. The metal used in jewelry and
autocatalysts touched $1,028.50, its highest since Oct. 3,
earlier in the session. 
    Spot silver        fell by 0.9 percent to $17.62 an ounce,
while palladium        was up 0.2 percent at $770.

 (Additional reporting By Nallur Sethuraman and Arpan Varghese
in Bengaluru; Editing by David Goodman and James Dalgleish)
  

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