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PRECIOUS-Gold hits highest in a year as rate hike expectations ebb
September 8, 2017 / 11:01 AM / 16 days ago

PRECIOUS-Gold hits highest in a year as rate hike expectations ebb

    * Dollar weakest since January 2015
    * Gold up 1.7 percent this week
    * Could reach 2016 high of $1,375/oz -analysts
    * Palladium retreats from 16-year high

 (Updates prices, adds palladium comment)
    By Peter Hobson
    LONDON, Sept 8 (Reuters) - Gold held near its highest in
more than a year on Friday as weak economic data lowered
expectations of a December interest rate rise in the United
States.
    The dollar plunged to its weakest since early 2015 and U.S.
bond yields held near 10-month lows, with the Federal Reserve
expected to be more cautious after a rise in U.S. jobless claims
and worries about the impact of hurricanes Irma and Harvey on
economic growth.                                     
    A weaker dollar fuels demand for gold by making it cheaper
for holders of other currencies and lower bond yields reduce the
opportunity cost of owning non-yielding bullion. Interest rate
rises meanwhile push up bond yields and boost the dollar.
    Spot gold        was down 0.2 percent at $1,346.45 at 1436
GMT after earlier hitting $1,357.54, its highest since August
2016. It was up 1.7 percent this week, on course for a third
consecutive weekly gain. 
    U.S. gold futures         for December delivery were 0.1
percent higher at $1,351.50.
    Julius Baer analyst Carsten Menke pinned the rise to the
weak dollar and hopes that interest rate rises would be delayed.
    New York Federal Reserve President William Dudley in a
speech on Thursday did not repeat an assertion three weeks ago
that he expects to raise rates once more this year.             
    Demand for gold as a safe haven investment was meanwhile
strong as South Korea braced for a possible further missile test
by North Korea when it marks its founding anniversary on
Saturday.             
    But high prices have weakened demand for physical gold in
top consumer Asia.             
    Technical resistance was at $1,353, gold's peak in September
last year, but upward momentum could lift it to the 2016 high of
$1,375, ScotiaMocatta analysts said. 
    In other precious metals, silver        was down 0.1 percent
at $18.05 an ounce after touching $18.21, its best since April.
It was on course for a 2.1 percent weekly gain.
    Palladium        was 1.9 percent lower at $937 an ounce and
heading for a first weekly decline in seven weeks. 
    The metal used in catalytic converters that curb pollution
from vehicle exhausts is trading near its highest since 2001.
But car output in China and the United States is falling and
shortages of metal are unlikely, said Capital Economics analyst
Simona Gambarini in a note. 
    She said palladium looked increasingly vulnerable to profit
taking and would likely fall to $850 by the end of the year.
    Platinum        was down 0.5 percent at $1,010.60, having
earlier touched $1,022.70, its highest since March.  

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
David Goodman/Alexander Smith)
  

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