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PRECIOUS-Gold near 5-week high as soft US data eases rate rise fears
May 14, 2015 / 3:56 AM / 2 years ago

PRECIOUS-Gold near 5-week high as soft US data eases rate rise fears

* Gold holds overnight gains of nearly 2 pct
    * Dollar near 3-month low after weak US retail sales

 (Adds WGC demand data, updates prices)
    By A. Ananthalakshmi
    SINGAPORE, May 14 (Reuters) - Gold hovered near a five-week
high on Thursday after jumping overnight following sluggish U.S.
retail sales data that triggered speculation the Federal Reserve
would not raise interest rates soon.
    Spot gold was steady at $1,214.10 an ounce by 0603
GMT, near the high of $1,218.80 reached on Wednesday. The metal
closed that session up 1.9 percent.
    Silver was also trading near five-week highs after a
3.5 percent gain overnight. 
    Data on Wednesday showed U.S. retail sales were flat in
April as households cut back on purchases of automobiles and
other big-ticket items, the latest sign the economy is
struggling to rebound after barely growing in the first quarter.
 
    The dollar tumbled to a three-month low against a basket of
major currencies following the data. 
    "This broad-based weakness in the U.S. retail space confirms
our belief that the Fed's hands are tied at the moment," said
Howie Lee, an analyst at Phillip Futures, adding that gold
prices would be well supported if a rate rise looked to have
been pushed back.
    Gold suffered losses and the dollar rose when strong data
last year led many to believe the Fed would raise rates from
record lows starting in June. 
    But U.S. growth in the first quarter slowed to a crawl as a 
strong dollar, a harsh winter and a steep fall in oil prices
hurt profits and discouraged consumers from spending. The Fed
has said it would raise rates only when data points to a
strengthening economy. 
    A delay in the rate rise could boost gold, a
non-interest-paying asset. 
    "While we do not discount the possibility of further price
gains in the near term, bullion may need to break over the
technical 200-day moving average of $1,218 in order for the
rally to be sustained," said HSBC analyst James Steel.
    Bullion could be helped by the prospect of a disruption to 
supply from South Africa because of a labour dispute.
    South Africa's Association of Mineworkers and Construction
Union (AMCU) wants the basic pay for entry-level workers in the
gold mining industry to be more than doubled, setting the stage
for tough pay talks.  
    The AMCU's call for a doubling of wages in the platinum
sector sparking a five-month strike last year.
    An industry report released on Thursday showed that global
gold demand eased 1 percent in the first quarter, as a drop in
Chinese jewellery demand narrowly outweighed a recovery in
Indian buying and Western appetite for bullion-backed funds.
 
    Despite the drop, China was the world's biggest consumer of
gold in the first quarter, well above India. 
            
    PRICES AT 0603 GMT
 Metal            Last     Change   Pct chg
                                           
 Spot gold         1214.1    -1.13    -0.09
 Spot silver       17.085   -0.045    -0.26
 Spot platinum     1148.4      0.4     0.03
 Spot palladium       785     1.13     0.14
 Comex gold        1214.1     -4.1    -0.34
 Comex silver       17.13   -0.091    -0.53
 Euro              1.1375                  
 DXY                 93.5                  
                                           
 COMEX gold and silver contracts show the
 most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Richard Pullin and
Alan Raybould)

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