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7 months ago
PRECIOUS-Gold prices ease as traders focus on rate hikes
December 22, 2016 / 11:26 AM / 7 months ago

PRECIOUS-Gold prices ease as traders focus on rate hikes

3 Min Read

* SPDR Gold holdings down over 12 pct since November
    * Platinum/palladium ratio: tmsnrt.rs/1QjSZAC

 (Updates prices, adds comment, NEW YORK dateline, byline)
    By Chris Prentice and Clara Denina 
    NEW YORK/LONDON, Dec 22 (Reuters) - Gold prices eased on
Thursday as the dollar advanced in choppy trade and on
expectations that the U.S. Federal Reserve will further raise
interest rates.
    New orders for U.S.-made capital goods rose more than
expected in November. Other data on Thursday showed that
third-quarter U.S. economic growth beat expectations, but the
number of Americans applying for unemployment aid hit a
six-month high last week and U.S. consumer spending increased
modestly in November.  
    Spot gold was down 0.27 pct at $1,128.4 per ounce by
2:53 p.m. EST (1953 GMT), and most-active U.S. gold 
futures for February delivery settled down $2.5, or 0.22
percent, at $1,130.70 per ounce. 
    "Despite the current retreat in the dollar, traders have
already positioned themselves for a neutral to lower end of the
year for gold, with the next support level in the $1,123 area,
as the focus remains on the hawkish message of the Fed, which
signaled three rate increases in 2017," ActivTrades chief
analyst Carlo Alberto de Casa said. 
    The dollar remained less than 1 percent below the
14-year high hit after the Fed raised U.S. interest rates last
week for the first time in a year. 
    More consistent evidence of U.S. economic strength could
prompt the Fed to tighten credit again sooner than later. Higher
rates discourage buying of non-interest-paying bullion, which is
priced in dollars.
    U.S. data published on Friday helped strengthen the case for
the Fed to raise rates, said George Gero, managing director at
RBC Wealth Management.
    SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.43 percent to
824.54 tonnes on Wednesday. Holdings are down over 12 percent
since November. 
    Silver was down 0.94 percent at $15.78 an ounce. 
Platinum dropped 0.78 percent to $907.80 and palladium
 fell for the seventh straight session, by 0.57 percent to
$653.72 an ounce.
    The spread between platinum and palladium contracted sharply
in recent weeks at $141 an ounce as a result of palladium's
strong performance.
    The autocatalyst metal has risen 16 percent this year, while
platinum has gained about 1 percent. The spread is at around
$250 per ounce, having averaged $465 over the last 30 years.

    
 (Additional reporting by Swati Verma in Bengaluru and Jan
Harvey in London; editing by Alexandra Hudson and Richard Chang)

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