May 14, 2018 / 1:59 PM / 3 months ago

PRECIOUS-Gold prices dip as U.S. dollar bounces from one-week low

    * Geopolitical risks could support bullion
    * Gold price expected to remain in narrow range

 (Recasts, updates prices; adds comment, second byline, NEW YORK
dateline)
    By Renita D. Young and Pratima Desai
    NEW YORK/LONDON, May 14 (Reuters) - Gold slipped on Monday
as the U.S. dollar strengthened and precious metals prices
remained within a tight range as investors awaited key U.S.
data.
    Spot gold        lost 0.3 percent at $1,314.17 per ounce by
2:31 p.m. EDT (1831 GMT), erasing earlier gains after the U.S.
dollar, in which it is priced, turned positive. U.S. gold
futures         for June settled down $2.50, or 0.2 percent, at
$1,318.20 per ounce.
    The dollar rose on Monday, erasing earlier losses, as
investors questioned whether a rally that last week sent the
greenback to more than four-month highs had run out of steam.
                  
    "Gold is largely paying attention to the dollar," said John
Caruso, senior market strategist at RJO Futures. 
    A stronger greenback makes dollar-denominated gold more
expensive for holders of other currencies, a relationship used
by funds to generate buy and sell signals.
    "We are seeing a lot of back and forth action with no news.
Tomorrow with retail sales, everything could change," Caruso
added.
    U.S. retail sales growth would suggest a strengthening
economy and give the Federal Reserve more reason to raise
interest rates.
    Higher U.S. rates make gold a less attractive investment,
because bullion does not offer interest.
    A U.S. interest rate hike, possibly in June at the Fed's
next meeting, would weigh on gold, though analysts say that
would be unlikely to push gold significantly lower.
    "Over the short term, and particularly during May, we see
gold trading between $1,285 and $1,338 an ounce as continued
strength in the dollar and rising rates pressure values lower,"
said INTL FCStone analyst Edward Meir.
    However, gold is expected to remain in this year's narrow
range, mostly between $1,300 and $1,350, unless supply or demand
fundamentals dramatically change.
    "Gold's trading range in the first four months between low
and high price was the lowest in percentage terms since it was
fixed to the dollar in 1971," said Macquarie commodities
strategist Matthew Turner.
    Further bullion support could come from rising security
risks in the Middle East after the United States said it would
withdraw from the 2015 international nuclear deal with Iran and
reimpose sanctions.                          
    Traders said falling gold imports by India, a top consumer,
were also undermining sentiment.             
    Silver        was down 0.7 percent at $16.51 per ounce.
    Platinum        declined 1.1 percent at $911.60 per ounce
and palladium        lost 0.2 percent at $994.22.

 (Additional reporting by Apeksha Nair in Bengaluru
Editing by David Goodman, Dale Hudson and Richard Chang)
  
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