February 23, 2018 / 4:19 AM / a year ago

PRECIOUS-Gold heads for worst week since early Dec as dollar gains

    * Spot gold may rise to $1,354/oz - technicals
    * Dollar index on track to gain almost 1 pct this week

 (Updates prices)
    By Eileen Soreng
    Feb 23 (Reuters) - Gold prices slipped on Friday and were
headed for their sharpest weekly drop in 2-1/2 months as the
dollar strengthened during the week.
    Spot gold        was down 0.4 percent at $1,326.65 an ounce
as of 0741 GMT, heading for a fifth session of fall in six. It
has shed 1.6 percent so far this week, its biggest since the
week ended Dec. 8, 2017.
    U.S. gold futures         were down 0.3 percent at $1,328.40
per ounce.
    "We remain somewhat cautious on gold over the short-term
given that we think the dollar rally is still not over,
especially in the light of U.S. Treasury yields remaining
elevated," said INTL FCStone analyst Edward Meir.
    The dollar index       , which measures the greenback
against a basket of currencies, was up 0.3 percent at 90.027, as
global investors gingerly dipped their toes back into riskier
assets amid rapidly shifting views on the U.S. monetary policy.
    It touched a 10-day high of 90.235 on Thursday after hitting
a three-year low of 88.253 late last week and was on track for a
gain of almost 1 percent this week.
    "People do know that interest rates will be raised, most
likely in March, and have priced that in," said Brian Lan,
managing director at dealer GoldSilver Central in Singapore.
    "People didn't go for the down, they covered their short and
start to buy gold back again." 
    Spot gold is expected to rise to $1,354 per ounce as it has
stabilised around a support at $1,326, according to Reuters
technical analyst Wang Tao.         
    "On the upside, broad resistance between $1,331-35 will be
followed by the $1,350 psychological level," said MKS PAMP Group
trader Tim Brown. 
    Meanwhile, Asian shares rebounded on Friday as comments from
a Federal Reserve official eased worries about faster rate rises
in the United States.            
    St Louis Fed President James Bullard tried to tamp down
expectations of four rate hikes in 2018, instead of the widely
anticipated three increases, saying on Thursday policymakers
need to be careful not to increase rates too quickly because
that could slow the economy.             
    Financial markets have fluctuated wildly this month as
investors fretted about how fast the Fed might raise rates after
official data showed a pick-up in U.S. inflation. 
    Fears of inflation boost gold, which is seen as a safe haven
against rising prices. But hikes in interest rates to fight
inflation make gold less attractive since it is not
    Among other precious metals, silver        fell 0.3 percent
to $16.57 an ounce, palladium        rose 0.1 percent to 
$1,039.74 and platinum        climbed 0.1 percent to $994.20.

 (Reporting by Eileen Soreng in Bengaluru; Editing by Subhranshu
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