September 21, 2017 / 7:52 PM / a year ago

PRECIOUS-Gold falls to near 4-week low as Fed signals December rate hike

    * Fed indicates one more rate hike this year
    * Also plans to trim asset holdings in $4.2 trillion
    * GRAPHIC-2017 asset returns:

 (Adds comments, details on U.S. legislation, updates prices,
milestones; adds NEW YORK dateline)
    By Devika  Krishna Kumar and Jan Harvey
    NEW YORK/LONDON, Sept 21 (Reuters) - Gold fell about 1
percent to its lowest in nearly four weeks on Thursday,
shrugging off further weakness in the dollar, after the Federal
Reserve signalled it was on track to raise U.S. interest rates
again in December. 
    The metal is highly sensitive to rising U.S. rates, which
boost the cost of holding non-yielding bullion relative to other
assets, while lifting the dollar, in which it is priced.
    Spot gold        was down 0.7 percent at $1,291.46 an ounce
by 3:25 p.m. EDT (1925 GMT), having earlier touched its lowest
since late August 25 at $1,287.61. U.S. gold futures        for
December delivery settled at $1,294.80.
    "It's follow through from yesterday ... I think the tone
people are thinking about is that it's hawkish enough," said Rob
Haworth, senior investment strategist at U.S. Bank Wealth
    "If we start to get healthcare legislation, tax policy,
repatriation, that means better economic growth and that's a
headwind for gold, so investors may be thinking that this is a
reasonable time to be taking profits as we price in a December
rate increase." 
    In a statement on Wednesday following its latest two-day
policy meeting, the U.S. central bank indicated it still
expected one more rate increase by the end of the year in spite
of a recent run of soft inflation readings.             
    It also said it planned to trim the $4.2 trillion in asset
holdings that it had built up in the wake of the 2008 financial
    U.S. Vice President Mike Pence on Thursday urged fellow
Republicans to get behind the party's "last best chance" to
repeal and replace Obamacare as congressional leaders scrambled
to secure enough support ahead of a planned vote next week.
    Gold has pulled back more than $60 an ounce since hitting
its highest in more than a year earlier this month at $1,357.54.
    "The only hope for gold is if we see an unexpected fall in
the dollar or a sharp rise in risk aversion, which would boost
the appeal of the perceived safe haven commodity," said Fawad
Razaqzada, technical analyst for
    "Otherwise gold could fall back sharply given that it has
also suffered major technical damage in not being able to hold
its own above the key $1,300 handle for too long."
    The dollar hit a two-month high versus the yen after the Fed
decision, but later fell against the euro after European Central
Bank President Mario Draghi said monetary policy was not the
right instrument to address financial imbalances in the euro
    Silver        was down 1.1 percent at $16.94 an ounce, after
falling to its lowest since Aug. 25 earlier in the session at
    Platinum        was 0.3 percent lower at $936.10 an ounce,
after touching a near eight-week low of $925 earlier in the day,
while palladium        was up 0.2 percent to $911.60 an ounce.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Jane Merriman and Chizu Nomiyama)
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