December 21, 2016 / 10:53 AM / in 7 months

PRECIOUS-Gold edges higher as dollar retreats from 14-year peak

3 Min Read

* Dollar pulls back after post-U.S. election rally
    * Outflows from gold exchange-traded funds weigh
    * Palladium touches six-week low at $658.50/oz
    * GRAPHIC-2016 metal returns: tmsnrt.rs/2eqHKkL

 (Updates prices)
    By Jan Harvey
    LONDON, Dec 21 (Reuters) - Gold firmed on Wednesday as a
retreat in the dollar from the previous session's 14-year peak
prompted some buyers to hunt bargains after the metal's sharp
slide from its November high. 
    Gold had been hit hard by a surge in the dollar after the
November U.S. elections, and a more hawkish tone from the
Federal Reserve after it hiked U.S. interest rates for only the
second time in a decade last month. 
    Prices of the metal have fallen more than 11 percent since
the elections before finding a floor at around $1,125 an ounce.
    Spot gold was up 0.3 percent at $1,134.71 an ounce at
1315 GMT, while U.S. gold futures for February delivery
were up $3.10 an ounce at $1,136.70.  
    "With what we're seeing in the dollar at the moment, there
is no real driver to push gold lower," ABN Amro analyst
Georgette Boele said. 
    "Because of that, we're seeing it taking a bit of a
breather. We've had some big moves this year, and (buyers) don't
want to burn their fingers for the remainder of the year."
    The dollar eased on Wednesday from the 14-year high it hit
the day before, pausing in a post-U.S. elections run higher that
has represented its entire gain for the year, while concerns
over the banking sector pulled European shares lower. 
    The Fed, which raised interest rates last week, signalled
three more increases next year. Gold is highly sensitive to
rising U.S. rates, which lift the opportunity cost of holding
non-yielding bullion, while boosting the dollar, in which it is
priced.
    Hefty outflows from gold-backed exchange-traded funds of
late have been pressuring gold, HSBC said in a note.
    "Declines of 300,000 ounces reported Monday night are the
latest in more than a month of consecutive gold ETF outflows,"
it said. "The GLD, the world's largest gold ETF, has fallen 13
percent to 26.6 million ounces since the U.S. November
elections."
    Among other precious metals, silver was down 0.3
percent at $16.03 an ounce, off the previous day's low of $15.59
an ounce, its weakest since April 11. Platinum was 0.2
percent lower at $913.99 an ounce.
    Palladium was down 0.5 percent at $661 an ounce,
having earlier touched a six-week low of $657.25. 
    It remains the best performing precious metal this quarter,
with a drop of just 8 percent, compared with a 14 percent drop
in gold prices and an 11 percent retreat in platinum. 

 (Additional reporting by Swati Verma and Nallur Sethuraman in
Bengaluru; Editing by Louise Heavens)

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