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PRECIOUS-Gold near 10-1/2-month low, heads for sixth weekly drop
December 16, 2016 / 3:16 AM / a year ago

PRECIOUS-Gold near 10-1/2-month low, heads for sixth weekly drop

* Greenback near 14-year highs
    * SPDR Gold holdings down 0.84 pct on Thursday
    * SPDR Gold holdings down over 10 pct since November

 (Adds comment, updates prices)
    By Swati Verma
    Dec 16 (Reuters) - Gold rose on Friday but remained near its
weakest level in 10-1/2 months as an interest rate increase by
the U.S. Federal Reserve and hints of further hikes in 2017
dampened the safe- haven appeal of the metal.
    Spot gold was up 0.5 percent at $1,134.18 an ounce by
0726 GMT. In the previous session, it hit its weakest since Feb.
2 at $1,122.35. 
    The metal was down more than 2 percent for the week, and is
on track for its sixth consecutive weekly loss.
    U.S. gold futures climbed 0.5 percent to $1,135.90
an ounce, after dropping nearly 3 percent in the previous
    "The nature of recent gold selling implies fresh shorting as
well as liquidation," said HSBC analyst James Steel.
     "The selling may not yet be exhausted. However, the pace
and intensity of the selling pressure and price declines seen on
Wednesday and Thursday are unlikely to continue, at least not at
the present rate."
    The U.S. dollar on Friday stood near a 14-year peak and bond
yields were highly elevated.  
    "The bearish factors for gold  namely a high U.S. dollar,
rising yields and equities and risk-on investor demand appetite
 leave bullion clearly on the defensive," Steel said. 
     U.S. Fed on Wednesday hiked rates for the first time in a
year and projected three more increases in 2017, up from the two
projected in September. 
    "Technically gold prices are oversold and need a bit of
rebound. That will happen only after the December payrolls
data," said Jiang Shu, chief analyst, Shandong Gold Group. 
    "The effect of the Fed has been huge. People are expecting
more rate hikes next year on expectations of higher inflation.
We see at least two rate hike in the first half of 2017 and
prices are going to be lower for a while."
    U.S. economic data on Thursday showed rising rents lifted
underlying U.S. inflation in November, and a decline in the
number of Americans filing for unemployment aid last week.
    Holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, which are down over 10 percent
since November, fell 0.84 percent to 842.33 tonnes on Thursday.
    Silver gained 1 percent at $16.11 an ounce, after
falling over 5 percent on Thursday. It has fallen over 4 percent
so far this week.
    Platinum rose 1.2 percent to $904.20, after dropping
to the lowest since early February in the previous session.
    Palladium lost as much as 1.2 percent to $692.35, on
track to finish the week down over 5 percent.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Joseph Radford and Sherry Jacob-Phillips)

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