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PRECIOUS-Gold hits five-week low, further losses expected
March 9, 2017 / 11:14 AM / 9 months ago

PRECIOUS-Gold hits five-week low, further losses expected

    * Gold drops to lowest since Feb. 1
    * Could break below $1,200 in next few days -Natixis
    * Silver, platinum extended losses to January troughs
    * Palladium falls to one-month low

 (Updates prices; adds comment, byline, NEW YORK dateline)
    By Marcy Nicholson and Eric Onstad
    NEW YORK/LONDON, March 9 (Reuters) - Gold fell for the sixth
straight session and reached a five-week low on Thursday, with
analysts expecting further losses as investors become
increasingly certain that U.S. interest rates will rise this
    Spot gold        was down 0.5 percent at $1,202.11 an ounce
by 3:01 p.m. EST (2001 GMT) after dropping to $1,201.02, its
weakest since Feb. 1.
    U.S. gold futures         settled down 0.5 percent at
    Strong U.S. economic data and comments by Federal Reserve
officials have reinforced expectations of a March U.S. rate
    Higher interest rates typically pressure gold prices because
they raise the opportunity cost of holding non-yielding bullion
while boosting the dollar, in which it is priced.
    "You could see the price continuing to drop as more news
comes out confirming what the market already knows," said
Bernard Dahdah, metals analyst at Natixis.
    "I wouldn't be surprised to see gold drop below $1,200 in
the next few days."
    February's U.S. private sector job growth numbers, released
on Wednesday, showed the biggest jump for more than a year.
    Investors are awaiting non-farm payrolls data on Friday for
further clues on the strength of the U.S. economy after Federal
Reserve Chair Janet Yellen said last week that the central bank
was poised to lift rates, provided that jobs and inflation data
held up.
    Her comments were seen as cementing plans for an increase at
the Fed's March 14-15 meeting.            
    "If the (non-farm payroll) data does come in better than
market expectations, it will drag gold prices further," said
OCBC analyst Barnabas Gan.
    "But with fund futures fully pricing in the rate hike story,
I'd presume gold will just be supported at the $1,200 handle
into next week."
    Interest rate futures        implied that traders had put
the chance of a rate hike next week at 86 percent        on
Wednesday, compared with 82 percent at Tuesday's close,
according to CME Group's FedWatch program.             
    "In gold, fundamentals on balance indicate a moderate short
position," UBS Chief Investment Office Wealth Management said in
a note.
    "In additional to our short model position, we have a long
gold position under macro-scenario trades, resulting in an
overall net long gold position."
    In other precious metals, silver        fell 1.6 percent to
$16.95 an ounce, having touched $16.91, the lowest since Jan.
    Platinum        dropped 0.9 percent to $935.90 after hitting
a low of $929.25, the weakest since Jan. 4, while palladium
       slid 2.8 percent to $747.20, after falling to $744.60,
its lowest since Feb. 6.

 (Additional reporting by Arpan Varghese in Bengaluru; Editing
by Ruth Pitchford and Richard Chang)

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