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PRECIOUS-Gold dips after strong U.S. data lifts dollar
October 5, 2017 / 10:23 AM / 12 days ago

PRECIOUS-Gold dips after strong U.S. data lifts dollar

    * U.S. trade deficit narrows on strong exports
    * Hurricane disruption expected to weaken U.S. jobs data

 (Updates prices, adds comment, adds NEW YORK to dateline)
    By Renita D. Young and Eric Onstad
    NEW YORK/LONDON, Oct 5 (Reuters) - Gold dipped on Thursday
after strong U.S. economic data lifted the dollar and underlined
expectations that U.S. interest rates would be hiked.
    Spot gold        dropped 0.34 percent at $1,270.01 an ounce
by 2:11 p.m. EDT (1811 GMT), while U.S. gold futures         for
December delivery settled down $3.60, or 0.3 percent, at
$1,273.20 per ounce.
    The dollar index        rose to a 2-1/2-month high after
data showed the U.S. trade deficit narrowed in August as exports
of goods and services rose to a more than 2-1/2-year high, while
jobless claims fell more than expected.             
    "The market is focusing on rate hikes, stock markets, a tad
stronger dollar and bond yields that have been moving up in
expectation of a potential tax deal and rate hike in December,"
said Ole Hansen, head of commodity strategy at Saxo Bank in
Copenhagen.
     Expectations of monetary tightening were also supported by
Philadelphia Federal Reserve Bank President Patrick Harker
saying he was still penciling in one more rate hike this year
and three next year.             
    Higher interest rates typically boost the dollar and aid
bond yields, adding pressure on dollar-denominated, non-yielding
gold.
    However, the long-term trend in annual U.S. economic growth
may be as low as 1.5 percent, San Francisco Federal Reserve
President John Williams said, a somber view implying perpetually
low interest rates and a difficult hurdle for the Trump
administration's promised economic surge.            
    Investors await more on Friday from U.S. non-farm payrolls
data, with investors expecting a slowdown in new jobs due to
disruptions from two major hurricanes in September.
    UBS cut its average forecast for gold for 2017 to $1,270
from $1,300 taking into account the likelihood of a December
rate hike weighing on the market, metals strategist Joni Teves
said in a note.
    "Gold is unfortunately still seeing some headwinds from
lower coin sales due to lack of price movement on the upside,"
said George Gero, vice president of RBC Capital Markets in New
York.
    In other precious metals, silver        rose 0.3 percent at
$16.62 an ounce.
    Palladium        was up 2.2 percent at $942.10 per ounce
after moving last week to a premium over sister metal platinum
      , which dropped 0.3 percent at $909.70 per ounce.
    "The overall direction of that spread will be determined by
gold, whether it manages to find support," Hansen said.
    "If it does, platinum has potential for better upside than
palladium, given the higher correlation between gold and
platinum," he added.

 (Additional reporting by Apeksha Nair in Bengaluru; editing by
Edmund Blair and Diane Craft)
  

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