October 3, 2018 / 3:59 PM / a year ago

PRECIOUS-Gold dips as lull in Italy crisis dampens safe-haven buying interest

    * U.S. stocks surge, dollar gains 
    * SPDR Gold ETF Holdings fall to lowest since February 2016
    * Silver hovers near previous session's one-month high

 (Updates prices, adds details)
    By Eileen Soreng
    BENGALURU, Oct 3 (Reuters) - Gold eased on Wednesday after
the Italian government indicated it was open to trimming its
budget deficit and debt, soothing investors' nerves and
prompting a wider move back into stocks and other higher-risk
    Bullion was also pressured by a stronger dollar as economic
data supported the view that the U.S. economy is strong.
    Spot gold        was down 0.3 percent at $1,199.56 per ounce
by 1:47 p.m. EDT (1747 GMT), after it touched an over one-week
high of $1,208.32 earlier in the session. 
    U.S. gold futures         for December delivery settled down
$4.10, or 0.34 percent, at $1,202.90 per ounce.
    Global stock markets rose, with the Dow Jones Industrial
Average opening at a record high, and Italian bonds rallied
after Rome pledged it would narrow budget deficits in the coming
    "With U.S. equities hitting record highs here, the
stickiness in equity prices will continue and the dollar
strength will continue to materialize with what the U.S. Federal
Reserve is doing," said David Song, a currency analyst at
    "Markets will continue to shun gold as we don't have any
incentive really to park money as we are seeing interest rates
going up," he added.
    A stronger greenback makes dollar-denominated gold more
expensive for holders of other currencies, while rising interest
rates increase the opportunity cost of holding non-yielding
    Gold prices have fallen for six months, shedding some 11
percent, largely due to the dollar's strength. The greenback has
benefited from a vibrant economy, rising U.S. interest rates and
fears of a global trade war.       
    "What the market is looking for is confirmation for
underlying strength of the U.S. economy," said Suki Cooper,
precious metals analyst at Standard Chartered Bank, adding
investors will now await U.S. non-farm payrolls data on Friday.
    According to a Reuters survey of economists, non-farm
payrolls likely increased by 185,000 in September after jumping
201,000 in August.             
    On the technical front, the gold market is "consolidating
sideways," Commerzbank analysts said in a weekly note.
    "It is not clear whether this is going to be a continuation
phase or is in fact a possible base developing. It has started
to erode the 55-day moving average and attention is on the
four-month downtrend at $1,213.57."    
     Indicative of the recent waning investor interest in gold, 
holdings of the largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust      , fell to the lowest since February
2016, at 23.72 million ounces on Tuesday.                
    Among other precious metals, silver        was up 0.2
percent at $14.67 per ounce, hovering close to the previous
session's high of $14.91, its highest in more than a month.     
    Platinum        rose 0.5 percent to $830.70 per ounce, while
palladium        gained 0.8 percent to $1,059.72.

 (Reporting by Arpan Varghese, Nallur Sethuraman and Swati
Verma; additional reporting by Sumita Layek and Vijaykumar
Vedala; Editing by Lisa Shumaker)
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