February 23, 2018 / 11:15 AM / a year ago

PRECIOUS-Gold heads for biggest weekly loss this year as dollar bounces

    * Dollar index up nearly 1 pct so far this week
    * Buying muted in China after New Year break
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices)
    By Jan Harvey
    LONDON, Feb 23 (Reuters) - Gold eased on Friday, heading
towards its biggest weekly decline in 2-1/2 months, as the
dollar climbed from last week's three-year low on the back of
higher Treasury yields.
    Spot gold        was down 0.1 percent at $1,330.51 an ounce
at 1240 GMT, its fifth losing session in six. U.S. gold futures
        were flat at $1,332.90 an ounce.
    Spot prices have shed 1.4 percent this week, their biggest
weekly decline since early December, after failing to sustain a
brief push back above $1,360 an ounce last Friday.
    "Once again gold failed to break resistance at
$1,360/1,370," ActivTrades analyst Carlo Alberto de Casa said,
adding that gold had staged a small rebound from the first
support range of $1,320 on Thursday. 
    "Gold remains lateral or slightly positive, (and) the main
trend will change only below $1,300," he said, adding that
further dollar strength could weigh on gold but it was unlikely
to push it below this level.
    Volatility has jumped across financial markets this month as
investors worry about the pace of U.S. rates hikes in the wake
of data showing a rise in inflation.
    St Louis Fed President James Bullard on Thursday tried to
tamp down expectations of four rate hikes in 2018. Three
increases are widely anticipated.             
    Stocks have steadied after recent sharp losses, while the
dollar has found its feet after falling last week to its lowest
since the end of 2014. Rising U.S. yields have put the currency
on track for its second biggest weekly gain of the year.        
    In addition to their impact on currencies, higher yields can
also weigh on gold in their own right, as they increase the
opportunity cost of holding non-interest bearing bullion. 
    The dollar index       , which measures the greenback
against a basket of currencies, was up 0.1 percent. 
    On the physical gold markets, buying was muted in China
after the week-long Lunar New Year holiday, traders said, which
closed financial markets until Thursday. 
    "China's return to the market following their New Year
holidays did little to ignite interest in gold," MKS said in a
note. "Mild buying only (acted) to provide underlying support
for prices, rather than see the metal higher."
    Among other precious metals, silver        was little
changed at $16.62 an ounce, palladium        was down 0.1
percent at $1,036.74 and platinum        was flat at $993.50.

 (Additional reporting by Eileen Soreng in Bengaluru; editing by
Edmund Blair and Jason Neely)
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