August 24, 2017 / 2:24 PM / 10 months ago

PRECIOUS-Gold eases on firmer U.S. dollar before Jackson Hole meeting

    * Huge fund long position key to market - analyst
    * Investors await speeches by Yellen, Draghi
    * Dollar steadies on concern about Fed policy

 (Updates prices, market comment; adds byline, NEW YORK
    By Devika  Krishna Kumar and Eric Onstad
    NEW YORK/LONDON, Aug 24 (Reuters) - Gold prices drifted
lower on Thursday, pressured by a firmer dollar as investors
awaited cues on further interest rate hikes from central bankers
meeting in Jackson Hole this week.
    Losses were limited, however, after a threat by U.S.
President Donald Trump to shut down the government unless he got
funding for a border wall with Mexico. Geopolitical risk tends
to drive buying of safe-haven investments like bullion.
    Key to the direction of the market were funds holding huge
long positions in Comex gold futures, said Ole Hansen, head of
commodity strategy at Saxo Bank in Copenhagen.             
    "We've had two failed attempts at the upside this year which
resulted in a flush out of longs, and the longer we stay here
without breaking higher, the bigger the risk that these guys
will start to get impatient," he said.
    Gold failed in April and June to break through the top of
its broad $1,200-$1,300 range this year.
    "But at the same time, there's this threat to close down the
U.S. government by Trump if he doesn't get his wall so that's
providing some underlying support." 
    Spot gold        was down 0.25 percent at $1,286.5 per ounce
by 2:45 p.m. ET (1845 GMT), giving back some of the previous
session's gains.
    The most-active U.S. gold         futures for December
delivery settled down $2.70 at $1,292 an ounce. 
    Traders were focused on an annual meeting of central bankers
in Jackson Hole, Wyoming, starting on Thursday, where Federal
Reserve Chair Janet Yellen and European Central Bank chief Mario
Draghi are set to deliver speeches on Friday on the outlook for
monetary policy and interest rates.
    "Gold traders were ambivalent today keeping the metal in a
tight range with market hoping that the dashing duo of Draghi
and Yellen can dazzle tomorrow at Jackson Hole and provide fresh
inspiration," said Tai Wong, director of base and precious
metals trading for BMO Capital Markets in New York.
    Bullion is highly sensitive to rising U.S. interest rates,
as these increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar, in which it is priced.
    The U.S. dollar recovered on Thursday, as investors await
what message Fed policymakers will send from Jackson Hole and
holding gains after U.S. jobless claims were better than
    Silver        was down 0.56 percent at $16.92 an ounce,
while platinum        fell 0.18 percent to $974.25 an ounce.
    Palladium        eased 0.16 pct to $931.50 per ounce.

 (Reporting by Eric Onstad in London and Devika Krishna Kumar
and Chris Prentice in New York; Additional reporting by Apeksha
Nair in Bengaluru; Editing by Dale Hudson and Phil Berlowitz)
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