February 1, 2018 / 1:32 AM / 9 months ago

PRECIOUS-Gold dips on outlook for U.S. rate hikes

    Feb 1 (Reuters) - Gold prices inched down early on Thursday
after the U.S. Federal Reserve left interest rates unchanged but
hinted at hikes later this year.
    
    FUNDAMENTALS  
    * Spot gold        was down 0.2 percent at $1,342.70 per
ounce at 0112 GMT. 
    * U.S. gold futures         were up 0.3 percent at $1,342.90
per ounce.
    * Gold prices rose over 3 percent in January, their best
month since August, largely due to weakness in the dollar. 
    * The dollar index       , which measures the greenback
against a basket of currencies was steady at 89.139.       
    * At Fed Chair Janet Yellen's last policy meeting as head of
the central bank, the Fed left interest rates unchanged. But its
message on inflation signalled it was on track to raise
borrowing costs in March under incoming chief Jerome Powell.
            
    * Inflation worries generally boost gold, which is seen as a
safe-haven against rising prices. But expectations that the Fed
will raise interest rates to fight inflation make gold less
attractive because it does not pay interest.
    * The Bank of Japan on Wednesday increased its buying of
medium-term Japanese government bonds in a move seen as a
warning shot against further rises in bond yields.             
    * Traders will now be looking ahead to the U.S. government's
jobs report on Friday that will include data on nonfarm payrolls
and average hourly earnings.
    * The ADP Research Institute said on Wednesday that U.S.
private employers added 234,000 workers in January, more than
the 185,000 forecast among analysts polled by Reuters.
                         
    * SPDR Gold Trust      , the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.49 percent to
841.35 tonnes on Wednesday from 845.49 tonnes on Tuesday.
            
    * January sales of U.S. Mint American Eagle gold coins fell
50 percent from the same month a year earlier, the slowest
January sales in 10 years, and January silver coin sales fell to
the lowest since 2009, government data showed on Wednesday.
            
    * U.S. President Donald Trump’s decision to withdraw federal
protections from millions of acres of Utah wilderness will
reopen much of the iconic terrain to gold, silver, copper, and
uranium land claims under a Wild West-era mining law, according
to federal officials.             
    * The U.S. Treasury said on Wednesday it planned to hold
larger debt auctions because of the winding down of the Federal
Reserve's bond-buying programme, but warned it would only be
able to pay all of the federal government's bills through
February.             
     
    DATA AHEAD (GMT)
    
     0145  China      Caixin manufacturing PMI final    Jan
     0850  France     Markit manufacturing PMI          Jan
     0855  Germany    Markit/BME manufacturing PMI      Jan 
     0900  Euro zone  Markit manufacturing PMI final    Jan
     1330  U.S.       Weekly jobless claims
     1500  U.S.       ISM manufacturing PMI             Jan
     1500  U.S.       Construction spending             Dec

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph
Radford)
  
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