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PRECIOUS-Gold at three-week low on firmer dollar, U.S. jobs data
June 15, 2017 / 11:18 AM / 5 months ago

PRECIOUS-Gold at three-week low on firmer dollar, U.S. jobs data

    * Dollar gains as Fed points the way to trimming bond
portfolio
    * Report of Trump probe spurs some safe haven buying
    * Silver hits weakest in nearly four weeks, platinum at
month low

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Eric Onstad
    NEW YORK/LONDON, June 15 (Reuters) - Gold fell to a
three-week low on Thursday, weighed down by a stronger dollar as
investors began to assess the potential for another U.S. rate
hike later in the year, supported by data showing a strong U.S.
jobs market.
    The losses in gold were limited, however, with bullion
underpinned by myriad global uncertainties, including a report
that U.S. President Donald Trump was under investigation.
                              
    "Just like in previous rate hikes, the next day the market
starts looking at the probability of the next hike because
everything was factored in beforehand," Natixis metals analyst
Bernard Dahdah said.
    The U.S. Federal Reserve raised interest rates by a notch as
expected on Wednesday and indicated further tightening before
the end of the year.             
    Spot gold        fell 0.5 percent to $1,254.05 an ounce by
2:56 p.m. EDT (1856 GMT), after touching $1,251.18, the weakest
since May 24.
    U.S. gold futures         for August delivery settled down
1.7 percent at $1,254.60.
    U.S. data on Thursday bolstered the case for higher rates,
as the number of Americans filing for unemployment benefits fell
more than expected last week.             
    "If you just look at economics, there's a chance of more
downside. The Fed was talking about another potential rate hike
later this year, which is negative for gold. But there's still
enough for people to worry about in geopolitics at different
levels," Dahdah said.
    Higher interest rates are negative for gold because they
increase the opportunity cost of holding non-yielding gold by
foregoing the chance of earning interest on cash holdings.
    "We think that the price of the yellow metal will fall in
the remainder of the year as the Fed hikes rates by more than
the market currently anticipates and global risks fade," said
Capital Economics in a note.
    "We remain of the view that Fed tightening will prove too
strong a headwind for the price of gold this year. Our end-2017
price forecast is $1,100 per ounce, down from about $1,255
today."
    The dollar index        rallied after the jobs data and
following Wednesday's Fed meeting.
    Among other precious metals, silver        shed 0.8 percent
to $16.74 per ounce after slipping to $16.64, the lowest since
May 19.        
    Platinum        dropped 1.6 percent to $920.99, having hit
the lowest in over a month at $913.50, while palladium       
shed 0.2 percent to $861.49 per ounce after rallying by 25
percent so far this year.
    "We're bullish on palladium compared to last year, but we
think it has overshot," Dahdah said.

 (Additional reporting by Nithin Thomas Prasad and Vijaykumar
Vedala in Bengaluru; Editing by Edmund Blair and Chizu Nomiyama)
  

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