March 21, 2017 / 3:39 AM / 5 months ago

PRECIOUS-Gold slips on technical selling; Fed stance lends support

    * Spot gold seen dropping to $1,221/oz - technicals
    * SPDR Gold holdings drop for 3rd straight session on Monday

 (Adds quote, updates prices)
    By Sethuraman N R
    March 21 (Reuters) - Gold prices edged lower on Tuesday,
failing to break a key resistance but hovered near a two-week
high hit in the previous session on prospects of a less-hawkish
Federal Reserve policy.
    The Fed is likely to wait at least until June policy meeting
to decide whether to lift U.S. interest rates again, Chicago Fed
President Charles Evans said on Monday.             
    Spot gold        was down 0.4 percent at $1,228.61 per
ounce, as of 0556 GMT. In the previous session, it touched its
strongest since March 6 at $1,235.50.
    U.S. gold futures         fell 0.4 percent to $1,228.60.
    "What we are seeing is a bit of washout in short-term
positioning as gold is unable to surpass the strong resistance
at $1,237," said Jeffrey Halley, senior market analyst at OANDA.
    "But, there is no other way than looking bullish at gold for
the moment. There are extended positions in dollar. We are going
to see this dollar correction running for a while, which will
support gold."
     Spot gold is expected to drop to $1,221 per ounce,
following its failure to break a resistance at $1,237,Reuters
technical analyst Wang Tao said.             
    "It looks like some weak longs stopped out this morning, but
expect to see good buying between $1,215-$1,225 area," a Hong
Kong-based precious metals trader said. 
    The dollar index       , which measures the greenback
against a basket of currencies, was down 0.2 percent at 100.240.
    The lack of a concrete policy from U.S. President Donald
Trump's administration is worrying investors and more people
will opt for gold when the stock markets go lower, analysts and
traders said. 
    Expectations that the Fed will have to step up rate hikes to
counter inflationary pressure from Trump's stimulus are also
waning after the central bank dropped no hints of an
acceleration in credit tightening last week.
    Fed's Evans, in one of the first official comments after the
Fed raised rates, said the U.S. central bank needs time to
digest economic and financial market data as well as any clarity
on the Trump administration's fiscal policy plans.
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.46 percent to 830.25
tonnes on Monday from 834.10 tonnes on Friday. Holdings fell for
a third straight session on Monday.          
    "A lot of people have bought gold at pretty unattractive
levels and are discarding after seeing interest rates going up.
But, I would expect those positions to comeback strongly once
gold breaks past the 200-day moving average around $1,262,"
OANDA's Halley said.
    Spot silver        dropped 0.4 percent to $17.34.
    Platinum        fell over 1 percent to $954.19, while
palladium        was down 0.3 percent at $777.50.

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by Vyas
Mohan and Sherry Jacob-Phillips)
  

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