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PRECIOUS-Gold falls below 1-month high as dollar, Treasury yields rise
March 28, 2017 / 10:36 AM / 9 months ago

PRECIOUS-Gold falls below 1-month high as dollar, Treasury yields rise

    * Gold resistance around $1,260, near the 200-day moving
average
    * Palladium retreats from last week's peak
    * U.S. car inventories rising, dealers upping incentives
-analyst
    * GRAPHIC-2017 asset returns  tmsnrt.rs/2jvdmXl

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Pratima Desai
    NEW YORK/LONDON, March 28 (Reuters) - Gold prices turned
lower on Tuesday, after nearing the prior session's one-month
high, as the U.S. dollar, Treasury yields and stock markets
extended gains.  
    Bullion was higher earlier on support from U.S. political
and economic uncertainty and expectations of a lower dollar.
    Spot gold        was down 0.3 percent at $1,249.56 an ounce
by 2:34 p.m. EDT (1834 GMT), having touched its highest in a
month at $1,261.03 on Monday. U.S. gold futures         settled
down 0.01 percent at $1,255.60.
    "We saw investors cycle out of gold but back into equity
markets," said Phillip Streible, senior commodities broker for
RJO Futures in Chicago, adding that profit-taking also added
pressure to the metal.
    "The dollar index and the equity markets are playing the
biggest role in the direction of gold right now."
    A strong greenback makes dollar-denominated gold more
expensive for holders of other currencies, potentially
decreasing demand.       
    The U.S. dollar        rallied above Monday's four-month low
against a basket of major currencies, while the 10-year Treasury
yield and U.S. stock indexes extended gains.            
    The move came as Kansas City Federal Reserve President
Esther George said she needs more details on the Trump
administration's fiscal proposals.                         
    Prices also responded to technical resistance around $1,260,
near the 200-day moving average, while support is expected to
kick in at a Fibonacci retracement level of about $1,245.
    The Fed raised interest rates this month, boosting the
dollar, which could strengthen further on expectations of
further rises after comments from its policymakers.
                                    
    However, some analysts expect the Fed to keep rates on hold
for some time, leaving the dollar to drift lower.
    Investor demand for gold can be seen in the world's largest
gold-backed exchange-traded fund, New York-listed SPDR Gold
Shares      , which reported an inflow of 2.7 tonnes on Monday.
            
    In other metals, spot silver        gained 0.1 percent at
$18.09 an ounce, after tapping $18.23, the highest since March
2. Spot platinum        slid 1.4 percent at $949.95.
    Palladium        ceded 0.6 percent to $788.22 an ounce. The
industrial metal used in autocatalysts hit $815.40 last week,
its highest since March last year, on expected growing demand
from carmakers.
    Analysts, however, are not convinced the fundamentals
justify current price levels.
    "U.S. car sales are moving sideways, inventories are rising
and dealers are upping incentives," said Julius Baer analyst
Carsten Menke.
    "China's car sales numbers for March will be crucial;
profit-taking will be triggered if weakness is confirmed.
European sales are solid, but slowing from last year."

    
 (Additional reporting by Arpan Varghese in Bengaluru; Editing
by Keith Weir and Richard Chang)
  

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