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6 months ago
REFILE-PRECIOUS-Gold edges lower after Yellen hints of rate hike
February 15, 2017 / 3:44 AM / 6 months ago

REFILE-PRECIOUS-Gold edges lower after Yellen hints of rate hike

 (Refiles to correct date)
    * Spot gold may break support at $1,220/oz - technicals
    * Silver off 3-mth high hit in previous session

    By Arpan Varghese
    Feb 15 (Reuters) - Gold prices edged lower on Wednesday
after U.S. Federal Reserve Chair Janet Yellen hinted at a hike
in interest rates in an upcoming meeting of the central bank.
    Spot gold        fell 0.2 percent to $1,225.96 per ounce at
0530 GMT, while U.S. gold futures         rose 0.1 percent to
$1,227.
    "The focus is really on the U.S. fiscal policy. And if that
stokes up the inflation expectations, we expect gold to suffer
and consolidate for a while," said Richard Xu, a fund manager at
China's biggest gold exchange-traded fund, HuaAn Gold.
    Xu added, however, that the fund still expects "gold will
pick up momentum in the second half of the year." 
    The Fed will likely need to raise interest rates at an
upcoming meeting, Yellen said on Tuesday, striking a more
hawkish tone than investors had expected, although she did flag
considerable uncertainty over economic policy under President
Donald Trump's administration.             
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion and boost the dollar.
    However, the underlying demand for bullion is still strong
owing to critical uncertainties, said ANZ analyst Daniel Hynes.
    Political risk from elections in Europe and worries over
Trump's policies were seen supporting safe-haven appetite for
the metal, the prices of which have risen about 10 percent after
touching 10-month lows in December, when the Fed raised interest
rates.
    "This bodes well even if interest rates are raised in
March," Hynes added.
    The dollar index        was mostly unchanged at 101.23, near
the 3-1/2-week high of 101.38 hit on Tuesday following Yellen's
remarks.
    Spot gold        may break a support at $1,220 per ounce,
according to Reuters technical analyst Wang Tao.             
    New York's SPDR Gold Trust      , the world's largest
physically-backed gold fund, said on Wednesday it has been
certified as sharia compliant, in the latest effort to spur
demand for bullion from investors in majority-Muslim countries.
            
    SPDR holdings have risen over 5 percent so far this month. 
    "We have seen lot of inflows in the recent weeks ... But,
this is just a temporary thing," said Xu of HuaAn Gold.
    "People, especially in China, are opting for high turnover
strategies. They come in and make profit and leave for other
assets."
    In other precious metals, spot silver        fell by 0.4
percent, to $17.88 per ounce. The metal hit $18.07 on Tuesday,
its highest since Nov. 11.
    Platinum        fell 0.3 percent, to $997.55 per ounce.   
Palladium        fell 0.1 percent, to $778.20 per ounce.

 (Reporting by Arpan Varghese and Nallur Sethuraman in
BENGALURU; Editing by Tom Hogue and Gopakumar Warrier)
  

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