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PRECIOUS-Gold falls to over 10-mth low as Fed signals more rate hikes
December 15, 2016 / 3:38 AM / a year ago

PRECIOUS-Gold falls to over 10-mth low as Fed signals more rate hikes

* Dollar at 14-yr peak after Fed ups 2017 rate hike
    * SPDR Gold holdings down 0.80 pct on Wednesday
    * SPDR Gold holdings have dropped about 10 pct since

 (Updates prices)
    By Swati Verma
    BENGALURU, Dec 15 (Reuters) - Gold dropped to its lowest in
over 10 months on Thursday as the dollar surged to its highest
in 14 years after the U.S. Federal Reserve raised interest rates
for the first time in a year and signalled more rate hikes in
    Spot gold had edged down 0.2 percent to $1,142.06 an
ounce by 0633 GMT after earlier touching its weakest level since
Feb. 3 at 1,134.71. It fell over 1 percent the session before.
    U.S. gold futures declined 1.7 percent to $1,143.70
per ounce. They earlier marked their lowest since Feb. 1 at
    "The outlook for gold is not particularly great. The more
hawkish comments from the Fed are clearly a headwind in the
short-term," said ANZ analyst Daniel Hynes.
    "The selling seen this morning is just the start of things
to come. Certainly the environment is difficult for gold given
the appreciation in the dollar."
    The dollar rose to a 14-year peak against a basket of major
currencies. The dollar index was up 0.5 percent at
102.300. It touched 102.620, the highest since January 2003.
    The U.S. Federal Reserve raised interest rates on Wednesday
and signalled a faster pace of increases in 2017 as central
bankers adapted to the incoming Trump administration's promises
of tax cuts, spending and deregulation. 
    Partly as a result of the changes anticipated under
president-elect Donald Trump, the Fed sees three rate hikes in
2017. That is up from the two it had previously predicted.
    "Given that (gold) prices have now crumbled, it remains to
be seen if we reach our downside target of $1,125," INTL FCStone
analyst Edward Meir said in a note.
    "We think this number is within reach if the dollar rally
continues and if U.S. equity markets regroup ... Investors might
conclude that even with higher rates looming for 2017, U.S.
equities will remain the asset class of choice for most."
    Holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, have fallen about 10 percent
since November. Holdings declined again on Wednesday by 0.80
percent to 849.44 tonnes. 
    "The sell-off in ETFs is the result of lack of investor
appetite in the gold markets. The weak physical markets in China
and India are not really helping gold," said ANZ's Hynes.
    Meanwhile, silver dipped 0.5 percent to $16.74 an
ounce and platinum rose 0.3 percent to $926.24.
    Palladium was up 0.7 percent at $725, after falling
over 1 percent on Wednesday.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Joseph Radford and Subhranshu Sahu)

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