November 14, 2018 / 4:41 PM / a month ago

PRECIOUS-Gold gains 1 pct on dollar retreat, short-covering

 (Recasts throughout, updates prices, adds comments)
    * Gold sees biggest one-day gain in nearly two weeks
    * Silver gains after falling to lowest since January 2016

    By Sethuraman N R and Swati Verma
    Nov 14 (Reuters) - Gold rose 1 percent on Wednesday, helped
by a slight retreat in the dollar following a rally and as some
investors covered their short positions after the metal held the
key $1,200 level.
    Spot gold        was up 1 percent at $1,214.14 per ounce at
13:43 p.m. EST (1843 GMT). This was the metal's biggest one-day
gain in nearly two weeks. Prices had slipped to their lowest
since Oct. 11 at $1,195.90 in the previous session. U.S. gold
futures         settled up $8.70, or 0.72 percent, at $1,210.10 
    "The dollar has weakened a little bit and that has helped
gold to catch a bid ... There has also been some short covering
after gold held the $1,200 level well," said Walter Pehowich,
executive vice president of investment services at Dillon Gage
Metals.
    "Also, the rebound in oil prices has given some support from
the inflationary point of view."
    An index that tracks the dollar versus a basket of six major
currencies        was down 0.2 percent after hitting a 16-month
high on Monday.
    "The key driver in the near term continues to be currency
movements," said Suki Cooper, precious metals analyst at
Standard Chartered Bank.
    Factors including increased buying by central banks, the
return of interest amongst exchange-traded fund (ETF) investors
and seasonal demand for physical gold "are acting as a cushion
to the downside," she added.
    Holdings of the world's largest gold-backed ETF, SPDR Gold
Trust      , remained near their highest level in more than two
months.          
    Bullion has fallen about 11 percent from a peak in April as
investors instead flocked to the dollar, with U.S.-China trade
friction unfolding against a background of higher U.S. interest
rates.
    The dollar has benefited over the past week from
expectations for further U.S. interest rate hikes, as well as
concerns over Italy's budget and ongoing Brexit talks. 
    The U.S. central bank is expected to increase rates in
December for a fourth time this year. Rising U.S. interest rates
increase the opportunity cost of holding non-yielding bullion.
    Among other precious metals, silver        rose 1 percent to
$14.12 per ounce, after earlier hitting $13.85 - its lowest
since Jan. 21, 2016.
   "With so much silver around and lack of investment, nobody
really cares about silver right now. There is so much above
ground inventory that is causing silver prices to fall,"
Pehowich of Dillon Gage Metals said.
    Palladium        rose about 1.5 percent to $1,126.20 per
ounce, while platinum        was down 0.1 percent at $833.90 an
ounce.

 (Reporting by Swati Verma, Karthika Suresh Namboothiri and
Arpan Varghese in Bengaluru; editing by G Crosse and Diane
Craft)
  
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