February 9, 2018 / 3:56 AM / 8 months ago

PRECIOUS-Gold firm as equities drop; heads for second weekly loss

    * Spot gold may fall to $1,306.81/oz - technicals
    * SPDR Gold holdings down 1.7 pct this week
    * Palladium heads for worst week since Jan 2016

 (Updates prices)
    By Sethuraman N R
    Feb 9 (Reuters) - Gold held steady on Friday amid tumbling
equity markets, but a firmer dollar and worries about rising
global interest rates weighed on prices.
    Spot gold        was mostly unchanged at $1,319 an ounce, at
0715 GMT. Prices touched their lowest since Jan. 4 at $1,306.81
on Thursday.
    Spot gold was down 1 percent for the week and headed for its
second straight weekly drop due to a recovery in the dollar.
    The dollar index       , which measures the greenback
against a basket of currencies, has risen over 1 percent so far
this week, its best since the week ended Oct. 27, 2017. 
    U.S. gold futures         were up 0.1 percent at $1,320.50
per ounce.
    Asian stocks tumbled on Friday after Wall Street shares
suffered yet another big slide amid worries over rising bond
yields, while perceived havens such as the yen and Swiss franc
drew demand amid the turmoil.            
    "Gold has got some support from safe-haven demand as people
are buying to hedge their portfolio against market volatility,"
said Helen Lau, analyst at Argonaut Securities
    "The threat of rising interest rates will have some downside
pressure on gold ...  However, in the near-term gold will gain
due to volatile markets."
    The Bank of England said on Thursday it was likely to raise
interest rates sooner and by more than it thought only three
months ago, because Britain's slow-moving economy is getting a
boost from the global recovery.             
    The benchmark 10-year Treasury note yield             rose
as high as 2.884 percent on Thursday after the Bank of England
signalled more aggressive rate hikes, just below Monday's
four-year high of 2.885 percent. It last stood at 2.8457
percent.
    "The surge in U.S. Treasury yields looks set to continue and
this will keep a lid on gold prices due to the likelihood that
real rates will be dragged up," BMI Research said in a note.
    "However, we expect a continued rise in inflation
expectations to cap real yields, which will limit downside
pressure on gold."
   Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.07 percent to 826.31
tonnes on Thursday from Wednesday.          
    Holdings fell over the last three sessions, and have
declined 1.7 percent so far this week, the worst since the week
ended July 30, 2017.
    Among other precious metals, silver        inched up 0.1
percent to $16.43 an ounce, after touching its lowest since Dec.
22, 2017 at $16.22 on Thursday.
    Platinum        rose 0.3 percent to $972.20 an ounce. It hit
its lowest since Jan. 10 at $965 in the previous session.
    Palladium        was mostly unchanged at $962.50. It marked
its lowest since Oct. 25, 2017 at $958.95 on Thursday. 

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph
Radford and Subhranshu Sahu)
  
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