June 28, 2018 / 4:40 AM / 5 months ago

PRECIOUS-Gold hits over six-month low as dollar strengthens

    * Platinum hits fresh 2-1/2-year low
    * U.S. rate hike prospects also weighing on gold
    * SPDR holdings fall 0.36 percent on Wednesday

 (Recasts, adds comments and updates prices)
    By Karen Rodrigues
    BENGALURU, June 28 (Reuters) - Gold prices hit their lowest
in more than six months on Thursday as the greenback held near
one-year highs amid mounting U.S.-China trade friction. 
    Spot gold        was down 0.2 percent at $1,249.71 an ounce,
as of 0752 GMT. Earlier in the session, the bullion touched
$1,248.25, its lowest since mid-December.
    U.S. gold futures         for August delivery dropped 0.4
percent at $1,251.20 an ounce.
    Gold has been on the downside mainly because of the
strengthening dollar and an increase in U.S. interest rates,
said Hareesh V, head of commodity research, Geojit Financial
Services.
    A stronger greenback makes dollar-denominated gold more
expensive for holders of other currencies.
    The dollar index       , which measures the greenback
against a basket of six major currencies, rose 0.1 percent to
95.342, after hitting the highest since July last year at
95.531, amid global trade tensions and demand from the looming
end of 2018's first half.       
    Gold prices, which usually rise in times of political and
economic uncertainty, have hardly benefited from ongoing global
trade tensions, while expectations that the U.S. Federal Reserve
will hike interest rates pulled down the bullion.
    "Nowadays, there is no safe-haven appeal for gold, people
are tracking other assets as safe-haven," Hareesh said.
    U.S. President Donald Trump on Wednesday said he will use a
strengthened national security review process to thwart Chinese
acquisitions of sensitive American technologies, a softer
approach than imposing China-specific investment restrictions.
                         
    "The dollar may continue to strengthen because of rising
U.S. interest rates and yields. That is all the key reason that
makes holding gold unattractive," said Helen Lau, analyst,
Argonaut Securities.
    Boston Federal Reserve President Eric Rosengren on Wednesday
said the central bank should continue to gradually raise
interest rates to lower the risk of a major policy error. 
                         
    The U.S. economy is growing at a 4.5 percent annualized rate
in the second quarter following the latest data on home sales
and advance trade balance released this week, the Atlanta Fed's
GDPNow forecast model showed.             
    The Fed has raised rates twice this year and expects another
two hikes by the end of this year. 
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, dropped 0.36 percent to 821.69
tonnes on Wednesday.          
    In other precious metals, spot silver        was 0.2 percent
higher at $16.08 an ounce. In the prior session, it touched its
lowest since mid-December at $15.94.
    Palladium        gained 0.2 percent to $949.25 an ounce.
    Platinum        plunged about 1 percent to $847.95 per
ounce. Early in the trade, the metal dropped to $845.50, marking
its lowest since late January 2016. 

 (Reporting by Karen Rodrigues in Bengaluru, Editing by Sherry
Jacob-Phillips)
  
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