September 7, 2017 / 8:30 PM / a year ago

PRECIOUS-Gold hits one-year peak as dollar drops on weak U.S. jobs data

    * Dollar index slides to lowest since January 2015
    * ECB sticks to outlook for growth, inflation

 (Adds comments, updates prices, dollar move, adds NEW YORK
    By Devika  Krishna Kumar and Eric Onstad
    NEW YORK/LONDON, Sept 7 (Reuters) - Gold prices rose to a
one-year peak on Thursday after the dollar tumbled on the back
of weak U.S. jobs data and an unchanged growth and inflation
outlook from the European Central Bank.
    The dollar index       , which measures the greenback
against a basket of six major rivals, fell as much as 1.1
percent to its lowest since January 2015 of 91.405.
    Spot gold        climbed to an intraday peak of $1,349.49 an
ounce, the strongest since September 7 2016, before paring gains
to $1,348.26 by 4:18 p.m. EDT (2018 GMT), a rise of 1.1 percent.
 It eased 0.3 percent in the previous session.
    U.S. gold futures         for December delivery settled at
    The number of Americans filing for unemployment benefits
jumped to its highest in more than two years last week amid a
surge in applications in hurricane-ravaged Texas, sending the
dollar lower.             
    Also pressuring the dollar on Thursday was a resurgent euro,
which was set for its biggest 1-day gain against the dollar
       since Aug. 25 after the European Central Bank broadly
stuck to its outlook for growth and inflation.       
    "ECB President Draghi's comments bruised the already wobbly
dollar which propelled gold to fresh highs of the current
rally," said Tai Wong, director of base and precious metals
trading for BMO Capital Markets in New York.
    "Gold often benefits from dollar weakness but that reverse
correlation has been particularly strong in recent 
weeks. Today, the chart of gold and the dollar index is quite
literally a mirror image."
    Higher interest rates tend to boost the dollar and push up
bond yields, putting pressure on gold prices by increasing the
opportunity cost of holding non-yielding bullion.
    Continuing tensions with North Korea over its nuclear tests
provided further support for safe-haven gold.
    "Geopolitical tensions remain elevated surrounding North
Korea, so I'd expect that would keep gold pretty well supported
in the short term and in the week ahead," said Jonathan Butler,
commodities analyst at Mitsubishi in London. 
     China agreed on Thursday that the United Nations should
take more action against North Korea after its latest nuclear
test, while also pushing for dialogue to help ease tensions.
    The market will soon start to shift its focus to the next
U.S. Federal Reserve's next monetary policy meeting, due to
begin on Sept. 19. 
    "I expect some downward pressure on gold starting next week
and a rebound in the dollar short-term," said Samson Li, an
analyst with Thomson Reuters-owned metals consultancy GFMS.
    Silver        rose 1.5 percent to $18.104 an ounce, while
platinum        rose 1.3 percent to $1,016.10 an ounce.
    Palladium        added 1.65 percent to $955 an ounce.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Greg Mahlich and James Dalgleish)
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