March 6, 2017 / 11:31 AM / 7 months ago

PRECIOUS-Gold falls under pressure from U.S. rate rise prospects

    * Support for gold around $1,210, the 100-day moving average
    * Fed's Yellen reinforces U.S. rate hike expectations

 (Recasts; updates prices; adds comment, byline, NEW YORK
dateline)
    By Marcy Nicholson and Pratima Desai
    NEW YORK/LONDON, March 6 (Reuters) - Gold fell for the third
straight session on Monday, but hovered above Friday's two-week
low, pressured by comments from Federal Reserve Chair Janet
Yellen that reinforced expectations of an increase to U.S.
interest rates this month.
    Spot gold        was down 0.6 percent at $1,226.61 an ounce
by 3:09 p.m. EST (2009 GMT), having slid on Friday to $1,222.51,
the lowest since Feb. 15. U.S. gold futures         settled down
0.08 percent at $1,225.50.
    Yellen said last week that the Fed was poised to lift
benchmark U.S. rates provided jobs and inflation data held up,
comments seen as cementing plans for an increase at the Fed's
March 14-15 meeting.            
    "Our economists now expect three rate hikes in 2017 and two
in 2018," said Standard Chartered in a research note, pointing
to March, June and December.  
    Higher U.S. rates would boost the U.S. currency and make
dollar-priced commodities more expensive for holders of other
currencies. 
    "Fed comments have become increasingly hawkish," Societe
Generale analyst Robin Bhar said, adding that the next set of
U.S. data to watch would be non-farm payrolls due this week.
    The U.S. monthly jobs report on Friday includes the non-farm
payrolls, seen rising by 190,000 in a Reuters poll.         
    "The U.S. labor market is tight, inflation is picking up ...
investment is revving up, consumer confidence readings are
increasing and both housing and equity valuations are moving
higher," INTL FCStone analyst Edward Meir said in a note. 
    However, traders said that geopolitical tensions created by
North Korea firing four ballistic missiles into the sea off
Japan's northwest coast were supportive to bullion.             
    "European elections are also a source of uncertainty; gold
will get support from that," one trader said, adding that there
was strong support for gold around $1,210, the 100-day moving
average.
    The market will also await monetary policy decisions from
the European Central Bank.
    "Mario Draghi and his colleagues may hint at the prospects
of tapering QE early," said Fawad Razaqzada, technical analyst
for Forex.com, adding that this would be bullish for the euro.
    Physical gold holdings in exchange-traded funds have fallen
since last week, partly because of the stronger dollar, but at
54.855 million ounces are still more than 3 percent higher than
at the start of February.                
    Spot silver        fell 1 percent to $17.78 an ounce,
platinum        slipped by 1.5 percent to $979.50, the lowest
since late-January.
    Palladium        rose 0.2 percent at $772.60.

 (Additional reporting by Arphan Varghese and Nallur Sethuraman
in Bengaluru; Editing by David Goodman and Meredith Mazzilli)
  

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