November 15, 2017 / 11:35 AM / a year ago

PRECIOUS-Gold drops slightly in choppy trade as dollar pares losses

    * Gold touches highest since Oct 20, then drifts lower
    * Underlying U.S. inflation firms
    * Surprise rise in U.S. retail sales lifts dollar from lows
    * Gold stuck in tight trading range

 (New throughout, updates prices, market activity and comment;
adds second byline and NEW YORK dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, Nov 15 (Reuters) - Gold prices dropped on
Wednesday in see-saw trade, first rising to the highest since
Oct. 20, then sliding and hovering near session lows, as the
U.S. dollar pared losses.
    U.S. data showed a rise in retail sales data last month and
an uptick in underlying inflation which cemented expectations
for further U.S. interest rate hikes. This helped the U.S.
dollar        bounce off lows against a basket of currencies.
    A weaker dollar makes gold cheaper for holders of other
    Spot gold        was down 0.2 percent at $1,277.51 by 1:41
p.m. EST (1841 GMT), after touching $1,289.09, the highest since
Oct. 20. The metal remained up 0.8 percent for the week. 
    U.S. gold futures         for December delivery settled down
$5.20, or 0.4 percent, at $1,277.70 per ounce. 
    The outlook for U.S. tax cuts that could stimulate economic
growth was clouded after U.S. Senate Republicans created new
political obstacles by linking the repeal of a key component of
Obamacare to the tax reform plans.              
    "There's speculation that tax cuts could be a long time
coming, meaning the Fed will not have to be as aggressive as it
might have been," said Robin Bhar, head of metals research at
Societe Generale. 
     ANZ analyst Daniel Hynes said Wednesday's inflation data
could be a trigger to break gold from the $1,265 to $1,290 range
in which it has traded since mid-October. 
    "The Fed wants inflation, but it’s just not happening. Rates
have been low for so many years, you would think the inflation
would be a lot higher, but it’s not," said Michael Matousek,
head trader at U.S. Global Investors in San Antonio.
    "If inflation would go higher, it would be easier for the
Fed to raise rates."
     U.S. stocks were lower as energy stocks remained under
pressure after oil prices fell for a fourth straight day.
    On the technical side, resistance was at the 50-day moving
average around $1,292 and a Fibonacci level at $1,297.70,
ScotiaMocatta analysts said.
    In other precious metals, silver        was down 0.4 percent
at $16.95 an ounce, platinum        rose 0.2 percent at $927.74
an ounce and palladium        was down 0.4 percent at $981.75 an
ounce after touching a two-week low of $973.40.

 (Additional reporting by Vijaykumar Vedala in Bengaluru;
editing by David Goodman and David Gregorio)
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