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PRECIOUS-Gold hits two-week low on U.S. rate hike prospects
August 22, 2016 / 4:40 AM / a year ago

PRECIOUS-Gold hits two-week low on U.S. rate hike prospects

* Silver hits lowest in over 7 weeks
    * Speculators cut bullish bets on gold, silver
    * Gold could touch $1,320 per ounce - technicals

 (Updates prices)
    By Sethuraman N R
    Aug 22 (Reuters) - Gold fell on Monday to its lowest in
nearly two weeks as the dollar strengthened after comments from
U.S. Federal Reserve officials increased bets on a U.S. rate
hike this year.
    Spot gold was down 0.6 percent at $1,332.80 an ounce
as of 0642 GMT, after touching a low of $1,331.35, a level not
seen since Aug. 9. 
    U.S. gold dropped 0.7 percent to $1,337.20 an ounce.
    The Fed is close to hitting its targets for full employment
and 2 percent inflation, the Fed's No. 2 policymaker Stanley
Fischer said on Sunday. 
    "The U.S. economic indicators are looking healthy and the
probability of a U.S. rate hike will go up further in the coming
months, rallying the dollar and putting pressure on gold," said
OCBC Bank analyst Barnabas Gan.
    There has been some shifting of funds from gold as oil
prices rallied, but the movement will not last long, Gan added.
     The dollar index, which tracks the greenback against
a basket of six major rivals, was up 0.4 percent at 94.894.
    "The weekend remarks out of the Bank of Japan (BOJ) provided
support to the dollar this morning, most pronounced in a sharp
move lower in silver," trading firm MKS PAMP Group said in a
note.
    The Sankei newspaper reported over the weekend that the BOJ
would not rule out deepening a cut to negative rates, quoting
Governor Haruhiko Kuroda. 
    Amid conflicting signals from the Fed in recent days,
central bankers from around the world will gather from Aug. 25
for an annual meeting in the mountains of Jackson Hole, Wyoming,
with Chair Janet Yellen due to speak the following
day. 
     "We think that a September move might be too early for the
Fed to act, but by the same token, a December move could be
late," said INTL FCStone analyst Edward Meir.
    Given that an imminent move is now close with just timing
being up in the air, gold might struggle over the short-term,
Meir added.
    A stronger dollar discourages gold-buying by making the
metal more expensive for holders of other currencies.
    Spot gold is expected to drop deeply to $1,320 per ounce,
according to Reuters technical analyst Wang Tao. 
    Speculators again decreased their bullish positions in COMEX
gold and silver contracts in the week to Aug. 16. 
    Spot silver hit a seven-week low of $18.77 an ounce
and was last down over 2 percent.
    Platinum was down 0.6 percent at $1,104, while
palladium fell 0.7 percent to $702.73.

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph
Radford and Subhranshu Sahu)

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