March 13, 2018 / 10:38 AM / 8 days ago

PRECIOUS-Gold claws way back into the black after Trump sacks Tillerson

    * Spot gold to fall further towards $1,300/oz -analyst
    * Trump fires Secretary of State Tillerson

 (Updates prices; adds comment, NEW YORK to dateline, additional
    By Renita D. Young and Eric Onstad
    NEW YORK/LONDON, March 13 (Reuters) - Gold prices turned
positive on Tuesday as the U.S. dollar lost ground after news
that U.S. President Donald Trump replaced Secretary of State Rex
Tillerson, while U.S. inflation data was in line with forecasts.
    Spot gold        was up 0.3 percent at $1,326.49 an ounce by
1:42 p.m. EDT (1742 GMT), while U.S. gold futures         for
April delivery settled up 0.5 percent at $1,327.10.
    Trump fired Tillerson after a series of public rifts over
policy on North Korea, Russia and Iran, replacing him with
loyalist Central Intelligence Agency Director Mike Pompeo.
    "The dollar is lower and gold is higher off the Tillerson
news. We've been seeing this pattern (of gold following the
dollar) because there's no other strong factor leading to buying
gold now," said Bill O’Neill, co-founder of Logic Advisors.
    The U.S. dollar index        relinquished its gains and fell
against a basket of currencies, making commodities priced in the
greenback cheaper for buyers using other currencies.
    Also weighing on the dollar was news that U.S. consumer
prices cooled in February, the latest indication that an
expected pick-up in inflation is likely to be only gradual.             
    Some investors had been worried stronger-than-expected CPI
data could stoke expectations that the U.S. Federal Reserve will
raise interest rates four times rather than three this year. 
    Higher interest rates typically make gold less attractive
since it does not bear interest.
    "Overall the outlook is not looking that great in the short
term. I still expect prices to go towards $1,300, said Georgette
Boele, ABN AMRO commodity strategist.
    Markets are looking to the next Fed meeting for direction on
the pace of U.S. interest rate hikes this year.
    "As we approach next week's FOMC day, we should see gold
come under pressure as it struggles to compete against
interest-bearing assets," said Daniel Ghali, commodities
strategist at TD Securities.
    Silver        rose 0.6 percent at $16.59 an ounce.
    Platinum        was up 0.4 percent at $966.60 an ounce, near
a one-week high of $970.90. Palladium        climbed 1.7 percent
to $995.30 per ounce, after touching a one-week high of $997.40.
    The platinum price will struggle to move back above
palladium, ING analyst Oliver Nugent said in a note.
    "Based on our own forecasts, we don't think such a move will
happen for the next few years due to platinum's weaker
fundamentals with the palladium backwardation actually making it
more expensive for investors to short the ratio."
    The platinum/palladium ratio increased from late February.
Palladium flipped to a premium over platinum last September for
the first time since 2001.                          

 (Additional reporting by Nithin Prasad and Eileen Soreng in
Bengaluru, and Marcy Nicholson in New York
Editing by David Goodman and Richard Chang)
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