January 13, 2017 / 11:52 AM / 8 months ago

PRECIOUS-Gold hovers below 7-week top, turns up as dollar slips

* Dollar turns lower after rising on strong retail sales
    * Investors await Trump inauguration
    * Coming up: Shortened U.S. holiday trade on Monday

 (Recasts, updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Peter Hobson
    NEW YORK/LONDON, Jan 13 (Reuters) - The price of gold turned
higher on Friday, hovering below the prior session's seven-week
top as the U.S. dollar weakened and U.S. Treasury yields came
off their highs, with the metal on track for a third straight
weekly gain.
    The greenback and yields were initially higher on the back
of strong U.S. retail sales, which reinforced the prospect of
the Federal Reserve raising rates this year, perhaps sooner than
previously expected, traders said. 
    Spot gold was 0.2 percent higher at $1,197.99 an
ounce by 3:09 p.m. EST (2009 GMT). It was up 2.1 percent on the
week. 
    U.S. gold futures settled down 0.3 percent at
$1,196.20 per ounce, ahead of the U.S. holiday on Monday, when
the market will close early. [nL1N1F21Z0
    The gold price has risen 6.5 percent since a mid-December
low and on Thursday reached its highest level since Nov. 23,
after President-elect Donald Trump failed to elaborate on his
plans to cut taxes and boost infrastructure spending.
    "There's clearly plenty of new long positioning that has
come into the market and at these (price) levels there's room to
take profit," said Mitsubishi analyst Jonathan Butler.
    "Trump's economic policies, in particular tax cuts for
corporates, could lead to ever-higher equity valuations that
divert funds away from bullion."
    Investors were looking ahead to Trump's inauguration on Jan.
20, when they will again be looking for detail on his plans for
the U.S. economy.
    "Unless you have a good trend narrative, I don't think specs
are going to pay much attention, so (the gold market has)
reverted back to following the dollar," said Rob Haworth, senior
investment strategist for U.S. Bank Wealth management in
Seattle.
    "I think that bullish dollar trend is what keeps a lid on
gold prices."
    Analysts at Scotiabank, however, said they expect gold to
strengthen further if support at $1,178 an ounce holds.
    Several Fed officials on Thursday cautioned that Trump's
fiscal and tax plans could spur a short-term economic boost that
would result in longer-run inflation and debt problems,
potentially raising demand for gold as an inflation
hedge. 
    Higher gold prices depressed physical sales in Asia this
week. 
    Among other precious metals, spot silver was up 0.08
percent at $16.78 an ounce, having hit its highest level in
almost a month at $16.98 in the previous session. 
    Platinum was up 1.2 percent at $984.20, holding below
Thursday's two-month high. Both silver and platinum were on
track to rise for the third straight week.
    Palladium was 0.7 percent lower at $750.90.
    

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Greg Mahlich and Tom Brown)

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