September 6, 2017 / 8:18 PM / 2 months ago

PRECIOUS-Gold eases from 1-year high on U.S. debt ceiling deal

    * Trump confirms he agreed debt ceiling deal
    * Dollar gains more than 0.5 pct vs yen
    * First upside resistance at $1,352 near Sept 2016 high

 (Adds comments, updates prices; NEW YORK dateline)
    By Devika  Krishna Kumar and Pratima Desai
    NEW YORK/LONDON, Sept 6 (Reuters) - Gold prices fell on
Wednesday from the one-year high hit in the previous session as
concerns over a potential U.S. government shutdown eased and the
dollar rose against the safe-haven yen. 
    President Donald Trump said on Wednesday he had agreed on a
three-month increase in the U.S. debt ceiling with congressional
leaders. If passed by the Republican-led Congress, it would
avert an unprecedented default on U.S. government debt, keep the
government funded for the first three months of the fiscal year
beginning Oct. 1 and provide aid to victims of Hurricane Harvey.
             
    U.S. Treasury yields rose on the news and gold fell as
safe-haven demand among investors worried about a short-term
default subsided.
    "I think today's pare back in gains was directly related to
the extension provided for three months with this debt ceiling,
so we saw some of that risk premium of a U.S. government
shutdown come out of the metals markets," said Phillip Streible,
senior commodities broker for RJO Futures in Chicago.
    Spot gold        fell 0.4 percent to $1,333.44 an ounce by
3:41 p.m. EDT (1941 GMT). It touched $1,344.21 an ounce on
Tuesday, its highest since Sept. 8, 2016.
    U.S. gold futures         eased to settle at $1,339.  
    The U.S. dollar, meanwhile, jumped more than half a
percentage point against the Japanese yen on the debt ceiling
agreement.                          
    A lower U.S. currency makes dollar-denominated gold cheaper
for holders of other currencies, which could boost demand.
    A standoff over the U.S. federal debt ceiling had raised
alarm bells among investors who feared a repeat of 2011 when a
prolonged showdown over increasing the borrowing limit and
subsequent downgrade of U.S. credit quality led to a slump in
the S&P 500 stock index.             
    "I still don't think we've seen the top in gold yet because
things are quite heated with North Korea," Streible said.
    Investor unease was reinforced after a North Korean diplomat
warned his country was ready to send "more gift packages" to the
United States as world powers struggled for a response to
Pyongyang's latest nuclear weapons test.             
    "The concern now is that another launch could take place on
September 9th, which is the (North Korea's) Independence Day,"
said INTL FCStone analyst Edward Meir.
    "Gold is likely to move higher over the course of September,
sustained by a weaker dollar and North Korean tensions ... Any
further wobbles in US equities could provide further support and
perhaps nudge it towards our $1390 price target."
    Technical resistance is at $1,352, near the high from last
September, followed by $1,376, the upper Bollinger band on the
monthly charts. But the momentum indicator near zero suggests
gold may be in for a period of consolidation.             
    Elsewhere silver        fell 0.2 percent to $17.85 an ounce,
platinum        fell 0.8 percent to $998.25 an ounce and
palladium        lost nearly 2 percent to $939 an ounce.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Louise Heavens and Tom Brown)
  

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