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PRECIOUS-Gold rises to five-month high, gains capped by strong dollar
April 7, 2017 / 7:18 PM / 8 months ago

PRECIOUS-Gold rises to five-month high, gains capped by strong dollar

    * Safe-haven demand up as U.S. fired missiles at Syrian air
    * Gold close above 200-day average key to higher levels
    * Gold on track for fourth week of gains

 (Adds news on China meeting, comments, updates prices,
    By Devika  Krishna Kumar and Zandi Shabalala
    NEW YORK/LONDON, April 7 (Reuters) - Gold hit a five-month
high on Friday after U.S. jobs data dampened expectations that
the U.S. Federal Reserve will raise interest rates, but the
metal gave up most gains as the dollar rose and safe haven
demand ebbed.
    U.S. employers added the fewest number of workers in 10
months in March, boosting gold, which is most attractive to
investors in a low interest rate environment.               
    Spot gold        rose 0.2 percent to $1,253.71 an ounce by
2:44 p.m. EDT (1844 GMT )after touching its highest since Nov.
10 at $1,270.46, putting it on track for a fourth consecutive
week of gains. U.S. gold futures         climbed 0.3 percent to
settle at $1,257.30 an ounce.
    Gold was also underpinned by investors looking for safety
after the United States fired cruise missiles at a Syrian air
base, escalating tensions with Russia and Iran. 
    Later in the session, however, safe haven demand faded and
the dollar index        climbed to three-week highs.
    "Unless you can make a case that the geopolitical risk
continues to escalate, I'm struggling with this positive
sentiment in the gold market," said Rob Haworth, senior
investment strategist for U.S. Bank Wealth Management in
    "The one factor that's in favor for gold is that you had
pretty negative sentiment coming into the year, so there is room
for speculators to increase their bullish positions." 
    Investors were cautious ahead of the meeting between U.S.
President Donald Trump and Chinese President Xi Jinping, but
Trump said on Friday he had made progress in talks and expected
them to overcome many problems.             
    From a technical perspective, Gold has struggled to break
above its 200-day moving average in previous sessions but broke
out above that key technical level intraday and has tested its
upper resistance at $1,264, the Feb. 28 high. 
    MKS PAMP analyst Tim Brown said if gold consolidated above
$1,260 it could be a catalyst for a push higher. 
    Russia, a staunch ally of Syria, said relations between
Washington and Moscow had been seriously damaged by the strike,
which was in retaliation for a deadly chemical attack on a
rebel-held area of Syria.                 
    Gold is often used as a hedge against political and
financial uncertainty and security risks. It has benefited
alongside other assets considered safe, such as the yen and U.S.
Treasury bonds.            
    Analysts say this support is also unlikely to be sustained
as the market shifts its attention back to the elections in
France and monetary policy.
    "We still feel that increases in U.S. interest rates will
prove too much of a headwind for gold prices. As such, we think
that the price of gold is likely to fall from about $1,265 today
to $1,050 by the end of the year," Capital Economics analysts
said in a note.
    Spot silver        fell 1.4 percent to $17.97 an ounce,
after touching $18.47, the highest since Feb. 27. It was on
track for its first weekly loss in four.
    Platinum        inched 0.4 percent lower to $952.50 while
palladium        also fell 0.4 percent to reach $799.90. 

 (Additional reporting by Nallur Sethuraman in Bengaluru and Jan
Harvey in London; Editing by Alexander Smith and Steve Orlofsky)

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