February 13, 2017 / 10:57 AM / 6 months ago

PRECIOUS-Higher dollar and equities weigh on gold

    * Investors focus on reflation trade but uncertainties
abound
    * Palladium touches highest since Jan. 25
    * Speculators raise net long position in gold in week to
Feb. 7

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Pratima Desai
    NEW YORK/LONDON, Feb 13 (Reuters) - Gold prices slipped on
Monday as the dollar rose and equities climbed, but political
and economic uncertainties in the United States and Europe are
expected to provide support for now.
    The spot price        was down 0.7 percent at $1,225.71 an
ounce by 2:51 p.m. EST (1951 GMT), falling further below last
week's three-month high of $1,244.67. U.S. gold futures        
settled down 0.8 percent at $1,225.80.
    The dollar hit a two-week high against the yen        as
investors focused again on the U.S. reflation trade which
dominated in the aftermath of Donald Trump's election as U.S.
President in November, but has stalled this year.       
    A higher U.S. currency makes dollar-denominated commodities
more expensive for holders of other currencies, potentially
subduing demand.
    A gauge of global equity markets advanced                
and bond yields             rose.            
    In Europe, national elections this year starting with the
Netherlands at the end of March make for an uncertain political
outlook.
    The first round of the presidential elections in France
follows in April, with the possibility of a victory for Marine
Le Pen of the National Front arousing much uncertainty.
    "Support for gold because of politics will hold this side of
the French election," said Danske Bank analyst Jens Pederson. 
    "Le Pen's comments on euro membership are very much on the
radar."
    Le Pen has rattled investors by promising to take France out
of the euro zone and to hold a referendum on EU membership.
    "Global uncertainty from the U.S., Europe and on the Korean
front will drive global prices high again," said Geofin Comtrade
Ltd's head of research, Hareesh V.
    North Korea said on Monday it had successfully test-fired a
new type of medium-to-long-range ballistic missile the previous
day, claiming advances in a weapons program it is pursuing in
violation of U.N. resolutions.             
    "Against soft physical demand for gold, the market remains
fixated upon the U.S., for now," Standard Chartered Global
Research said in a note.
    "Our economists believe a March (U.S. interest) rate hike is
unlikely and they do not think the Fed is in a rush to hike
rates again."
    Strong demand for gold can be seen on COMEX, where
speculators raised their bullish gold bets to a two-month high,
U.S. government data showed on Friday.              
    Meanwhile silver        eased 0.7 percent to $17.83 per
ounce, while platinum        lost 1.2 percent to $998.50 per
ounce. 
    Palladium        was down 1.4 percent at $773.25 per ounce,
after reaching the highest since Jan. 25 at $786.90.

 (Additional reporting by Arpan Varghese and Nallur Sethuraman
in Bengaluru; Editing by Ruth Pitchford and James Dalgleish)
  

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