March 23, 2017 / 3:28 PM / in 4 months

PRECIOUS-Firmer dollar weighs on gold, palladium hits two-year peak

4 Min Read

    * Dollar index climbs off seven-week lows
    * U.S. new home sales hit 7-month high in Feb
    * Palladium climbs to highest price since March 2015

 (Adds U.S. home sales data, updates prices)
    By Eric Onstad
    LONDON, March 23 (Reuters) - Gold edged lower on Thursday,
weighed down by a firmer dollar, while palladium hit its highest
price in two years, helped by economic data.
    Spot gold        was down 0.2 percent at $1,246.21 an ounce
at 1517 GMT, retreating from an intraday peak of $1,253.12, its
highest since Feb. 28. 
    U.S. gold futures         shed 0.3 percent to $1,246.60.    
    "The most important reason is that the dollar is stronger
and yields in the U.S. are edging a little higher. Later in the
year I expect prices to move higher, but for the moment $1,250
is the top end of the range," said ABN Amro commodities
strategist Georgette Boele in Amsterdam.
    The dollar index       , which measures the greenback
against a basket of currencies, was slightly firmer at 99.737.
It had dropped to its lowest in nearly seven weeks at 99.547 on
Wednesday.  
    The dollar briefly slipped on Thursday after U.S. jobless
claims rose unexpectedly, sending gold temporarily higher.
      
     But with jobless levels still below a level associated with
a strengthening labour market, and data later showing U.S. new
homes sales hitting a seven-month high, the dollar and gold
largely returned to previous levels.             
    OCBC analyst Barnabas Gan pointed to the impact of sustained
political stresses in Europe and the United States.
    "This kind of uncertainty does lift gold prices," he said.
    The immediate focus is on whether U.S. President Donald
Trump can gather enough support to pass a bill to roll back
Obamacare, representing a major test of his legislative ability
and whether he can keep his promises to business.            
    A rough ride for the healthcare plan could affect Trump's
efforts to cut taxes and boost infrastructure, with the
potential to drive more investors to gold as a safe haven if
stock markets fall, analysts and traders said.
    "A sustained break and close above $1,250 will be the key
for a test of the 200-day moving average at $1,259.50, while
support initially sits at $1,244-$1,245," said MKS PAMP Group
trader Sam Laughlin.
    Palladium       , meanwhile, climbed to a peak of $808.70 --
its highest since March 10, 2015 -- before paring gains to $805
for a rise of 2.4 percent. 
    "Palladium has a completely different dynamic (to other
precious metals)," Boele said. "It is far more related to
economic data releases, the expectations for the economy, both
emerging and developed."
    The European Central Bank said on Thursday that economic
recovery in the euro zone was gaining ground while data last
week indicated strong U.S. factory output, a rebound in U.S.
consumer sentiment and a rise in European car sales in February.
                                    
    Palladium is mainly used in catalytic converters that curb
pollution from vehicle exhausts.
    Spot silver        rose 0.5 percent to $17.59 while  
platinum        advanced 0.5 percent to $963.80.

 (Additional reporting By Nallur Sethuraman in Bengaluru;
Editing by David Goodman and Ruth Pitchford)
  

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