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PRECIOUS-Gold little changed as Fed rate expectations offset geopolitical risk
April 10, 2017 / 9:05 PM / 7 months ago

PRECIOUS-Gold little changed as Fed rate expectations offset geopolitical risk

    * US dollar index hits three-week high in Asian trade before
easing
    * Concerns over N. Korea and Middle East underpin gold
    * Fed Chair Janet Yellen strikes cautious note
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Adds comments, milestones, silver market moves, updates
prices, adds NEW YORK dateline)
    By Devika  Krishna Kumar and Jan Harvey
    NEW YORK/LONDON, April 10 (Reuters) - Gold prices ended
little changed on Monday as expectations that the Federal
Reserve will press ahead with interest rate rises offset
concerns over political tensions in North Korea and the Middle
East. 
    Late in the session, prices were supported after Fed Chair
Janet Yellen struck a cautious note, saying it would be
appropriate to gradually raise rates if the economy continued to
perform strongly.             
    Spot gold        was up 0.04 percent at $1,254.06 an ounce
by 4:32 p.m. EDT (2032 GMT), while U.S. gold futures        for
June delivery settled 0.3 percent lower at $1,253.90.
    On Friday, the metal rose above $1,270 on Friday for the
first time since early November following much weaker than
expected U.S. jobs data, and after the United States launched a
missile strike on a Syrian air base.
    Top aides to U.S. President Donald Trump differed on Sunday
on where U.S. policy on Syria was headed after last week's
attack on a Syrian air base, while U.S. Secretary of State Rex
Tillerson warned that the strikes were a warning to other
nations, including North Korea.                         
    "Given light market positioning there is scope for
safe-haven flows; however, complacency suggests prices are more
likely to range-trade in the near term," Standard Chartered said
in a note.
    "Gold is caught between rising tensions that could stoke
safe-haven flows, and the market looking through the
geopolitical risks to the next U.S. rate hike given the tight
correlations." 
    After rallying for a fourth month though gold is trading
just above its 200 day moving average.
    "There appears to have been some profit taking after that
move above the 200-day moving average on Friday," Mitsubishi
analyst Jonathan Butler said.
    "Friday's U.S. unemployment reading, which fell to a 10-year
low, would appear to confirm that the United States is
approaching full employment," he said. "This has increased the
probability of a June rate rise... (and) clearly weighed on
gold."
    The U.S. dollar fell on Monday as Treasury Yields dipped
after starting the week near three-week highs against major
currencies        in the wake of a Federal Reserve official
reinforcing the U.S. central bank's commitment to continue
raising interest rates.
    By the afternoon in New York, U.S. Treasury yields pared an
earlier drop, prompted by soft demand at a $24 billion auction
of three-year notes               , the first part of this
week's $56 billion coupon-bearing government debt supply.
    Expectations that the pace of U.S. interest rate increases
will pick up this year, lifting the opportunity cost of holding
non-yielding bullion, have proved a major drag on gold. 
    The euro also came under pressure from worries over the
tightening race for the French presidency.
    The wider financial markets took on a more cautious tone on
Monday, with trading volumes muted by political tensions in the
Middle East and the Korean peninsula.            
    In other precious markets, silver prices slipped after the
LBMA silver price benchmark auction was paused for 17 minutes
after a circuit breaker was triggered when the auction price
moved outside of the spot range, the CME said.             
    Silver        was down 0.2 percent at $17.93 an ounce,
having hit its highest since Feb. 27 at $18.47 on Friday.
Platinum        was 1.2 percent lower at $939.9, while palladium
       was down 1.6 percent at $788.20.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Goodman and Susan Thomas)
  

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