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PRECIOUS-Gold hits 4-week low as U.S. rate hike outlook weighs
May 24, 2016 / 9:41 AM / a year ago

PRECIOUS-Gold hits 4-week low as U.S. rate hike outlook weighs

* Hawkish comments from Fed fuel talk of near-term rate hike
    * Dollar rises to two-month high vs currency basket
    * GRAPHIC-2016 asset returns: reut.rs/1WAiOSC

 (Updates prices, adds comment)
    By Jan Harvey
    LONDON, May 24 (Reuters) - Gold fell to a four-week low on
Tuesday as hawkish comments from Federal Reserve officials in
the previous session sent the dollar to a two-month high against
a currency basket.
    The prospect of an early rate hike, as indicated by Fed
meeting minutes released last week, and a strengthening dollar
have pushed gold down more than 4 percent so far in May, putting
it on track for its biggest monthly decline since November.
    Gold is highly sensitive to rising interest rates, which
lift the opportunity cost of holding the non-yielding metal,
while boosting the dollar, in which it is priced. 
    Spot gold was down 0.9 percent at $1,236.81 an ounce
at 1340 GMT, off an earlier low of $1,235.35. U.S. gold futures
 for June delivery were down $14.50 an ounce at $1,237.00.
 
    "What we're seeing is a lot of things that would mean higher
rates coming together," Oxford Economics analyst Daniel Smith
said. 
    "The U.S. economy is actually doing reasonably well... and
with higher oil prices and a tightening U.S. labour market,
everything's starting to come together to (suggest) it would be
sooner rather than later."
    Senior Fed officials on Monday said that rates being kept
too low for too long could cause financial instability, and that
the U.S. central bank would continue with rate increases next
year.   
    More Fed policymakers are scheduled to speak this week and
are expected to back the case for a rate hike within months. Fed
Chair Janet Yellen will be at a panel event hosted by Harvard
University on Friday. 
    "We had more hawkish noises yesterday, with a trio of Fed
speakers lining up to say that June or July are live meetings
for considering a rate increase," Societe Generale analyst Robin
Bhar said. 
    "The dollar's in the ascendancy... and gold is coming under
pressure. We've lost sight of the $1,250 level, which was
holding things up pretty well. We'll be looking to hold here --
if not, we could get back to the low $1,200s."
    Holdings in the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares, rose 0.38 percent to 872.52 tonnes
on Monday. 
    Meanwhile, silver was down 0.6 percent at $16.31 an
ounce, after earlier hitting a five-week low of $16.19, while
platinum was down 0.3 percent at $1,005.20 per ounce, off
a four-week low of $997.79. 
    Palladium was down 0.9 percent at $541.97 an ounce,
having hit a near six-week trough of $538.98 earlier in the
session. 

    
 (Additional reporting by Vijaykumar Vedala and Koustav Samanta
in Bengaluru; Editing by Alexandra Hudson and Adrian Croft)

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