June 16, 2017 / 10:16 AM / a month ago

PRECIOUS-Gold steadies after rate hike sell-off

3 Min Read

    * Gold on track for second straight weekly fall
    * Bullion taps lowest since May 24
    * Palladium set for first weekly decline in four

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Peter Hobson
    NEW YORK/LONDON, June 16 (Reuters) - Gold was little changed
on Friday as investors judged that a sell-off sparked by a rise
in U.S. interest rates this week had run its course and the
dollar weakened, making bullion cheaper for holders of other
currencies.             
    Spot gold        was up 0.1 percent at $1,254.24 an ounce by
2:19 p.m. EDT (1819 GMT), having earlier hit $1,251.05, its
lowest since May 24. 
    U.S. gold futures         settled up 0.2 percent at
$1,256.50.
    Gold was on track for a second weekly loss and has fallen
more than 3 percent from a high of $1,295.97 on June 6 as
investors braced for the U.S. Federal Reserve to raise interest
rates and signal its policy outlook on Wednesday.
    Bullion is sensitive to higher interest rates because they
push bond yields higher, increasing the opportunity cost of
holding non-yielding gold, and tend to boost the dollar. 
    "Gold has been spooked by the hawkish tone from the Fed, 
which triggered some long liquidation both in futures and
exchange-traded funds," said Saxo Bank analyst Ole Hansen.
    Fears of more rate increases this year were heightened on
Thursday by strong U.S. economic data, though housing numbers on
Friday disappointed, pushing bond yields and the dollar lower.
                                      
    "If the Fed were to follow a more aggressive approach, this
could preclude any significant rise in gold prices for the rest
of the year," Commerzbank analysts wrote in a note.
    In other precious metals, silver        was 0.2 percent down
at $16.68 an ounce after tapping a four-week low at $16.62 and
heading for a weekly decline of about 2.6 percent, its biggest
in six weeks. 
    "Price action in both gold and silver of late seems to imply
that traders still have plenty of short-term long positioning on
their books," said OANDA analyst Jeffrey Halley. 
    Platinum        gained 0.5 percent to $924.50 an ounce,
having touched its lowest in more than a month on Thursday at
$913.50.
    "Latest jewelry import data from China suggests an
improvement on a weak 2016. This is important as Chinese jewelry
demand accounts for about 20 percent of total platinum use,"
said Giovanni Staunovo, analyst for UBS Chief Investment Office.
    South African mine supply, however, rose in the first
quarter of 2017 and Staunovo said UBS trimmed its 6- and
12-month platinum price upside forecast to $1,000 an ounce from
$1,050 an ounce previously.
    Palladium        was down 0.3 percent at $867.20 and on
track for its first weekly decline in four weeks.

 (Additional reporting by Nithin ThomasPrasad and Vijaykumar
Vedala in Bengaluru; Editing by Marguerita Choy and David
Goodman)
  

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