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PRECIOUS-Gold at near 3-wk high after U.S. GDP disappoints, set for monthly gain
July 29, 2016 / 10:26 AM / a year ago

PRECIOUS-Gold at near 3-wk high after U.S. GDP disappoints, set for monthly gain

* U.S. Q2 GDP rises at a 1.2 percent rate
    * BOJ stimulus falls short of market expectations
    * Palladium, platinum on track for monthly gains
    * GRAPHIC-2016 asset returns: reut.rs/1WAiOSC

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Clara Denina 
    NEW YORK/LONDON, July 29 (Reuters) - Gold rose to its
highest level in nearly three weeks on Friday after much
slower-than-expected U.S. economic growth weighed on the dollar,
and was on track for a second monthly gain in a row. 
    The U.S. Commerce Department reported that GDP grew at an
annual rate of 1.2 percent in the second quarter, far less than
economists' estimates of 2.6 percent growth. 
    Spot gold, down initially, reached its highest level
since July 12 at $1,353.90 an ounce after the U.S. data and was
up 1.4 percent at $1,353.44 by 2:59 p.m. EDT (1859 GMT). 
    U.S. gold settled up 1.3 percent at $1,349 per
ounce.
    "The Fed's decision to lift rates is data-dependent and if
figures continue to disappoint, like second-quarter GDP growth
today, gold will push higher," Commerzbank analyst Carsten
Fritsch said.
    At its policy meeting this week, the Federal Reserve stopped
short of indicating that a further increase in U.S. interest
rates is on the cards for later this year.
    "You have lower odds now of a Fed rate increase in the near
term," said Rob Haworth, senior investment strategist for U.S.
Bank Wealth Management in Seattle, adding that he expects a U.S.
interest rate hike in December.
    "This GDP report isn't enough to take that off the
calendar."
    Uncertainty over the path of interest rates has held gold 
in check since it rallied to more than two-year highs in the
wake of Britain's shock vote last month to leave the European
Union. 
    The dollar fell 1.2 percent on Friday against a
basket of six currencies. 
    The U.S. currency's decline was also due to the strength of
the yen, after the Bank of Japan under whelmed investors by
expanding monetary stimulus through only a modest increase in
purchases of exchange-traded funds.  
    Palladium rose 2.7 percent to $713.90 an ounce, the
highest since October 2015. It is up nearly 19 percent this
month, and on track to notch up its best monthly performance
since February 2008.
    Platinum climbed 2.7 percent to $1,157.60 an ounce, a
14-month high, and was on track for its strongest month since
January 2012, with more than 12 percent growth this month. 
    "We are bullish on the PGMs (platinum group metals)
fundamentally, but we are unclear as to whether or not
fundamental motivations have been driving the current PGM
rally," HSBC said in a note.
    Silver was up 0.9 percent at $20.33 an ounce, and
headed for a second monthly gain.  

    
 (Additional reporting By Nallur Sethuraman and Vijaykumar
Vedala in Bengaluru; Editing by Susan Fenton and Sandra Maler)

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