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PRECIOUS-Gold marks over 1-wk high, but U.S. rate hike prospects curb gains
October 10, 2017 / 4:20 AM / in 9 days

PRECIOUS-Gold marks over 1-wk high, but U.S. rate hike prospects curb gains

    * Spot gold still targets $1,299/oz -technical analyst
    * Silver touches 2-week high above $17/oz

 (Adds detail, updates prices)
    By Apeksha Nair
    Oct 10 (Reuters) - Gold prices inched up to their highest in
more than a week on Tuesday, drawing support from geopolitical
tensions and a softer dollar, but expectations of another U.S.
Federal Reserve interest rate hike this year curbed upside
momentum.
    Spot gold        was up 0.3 percent at $1,287.31 an ounce by
0653 GMT, after touching its highest since late September at
$1,288.70 earlier in the session.
    U.S. gold futures         for December delivery climbed 0.4
percent to $1,290 per ounce. 
    Geopolitical tensions and uncertainty around what U.S.
President Donald Trump might do about North Korea kept a certain
degree of risk aversion alive in markets, and that was providing
temporary support to gold prices, said Mark To, head of research
at Hong Kong's Wing Fung Financial Group.  
    Russia and China called for restraint on North Korea on
Monday after Trump warned over the weekend that "only one thing
will work" in dealing with Pyongyang, hinting that military
action was on his mind.             
    A softer dollar on Tuesday was also lending support but
growing expectations that the Fed would raise interest rates
again this year kept a check on gold's gains.       
    Fed funds futures showed traders were pricing in a nearly 90
percent chance of a rate hike in December.
    Higher interest rates tend to boost the dollar and weigh on
the greenback-denominated gold.
    The European Central Bank should reduce its asset buys from
next year with the aim of ending them altogether, ECB Executive
Board member Sabine Lautenschlaeger said on Monday, just weeks
before policymakers decide whether to curb stimulus.
                 
    "Most of the central banks are going to tighten or have
renormalisation of monetary policy in the post-financial-tsunami
era. This point is really restraining the upside for gold
prices. I think $1,300 should be a resistance level," To said.
    Reuters technical analyst Wang Tao sees spot gold still
targeting $1,299 per ounce, as it has broken a resistance at
$1,281.              
    "We still reiterate our view ... that the precious metal
will likely remain under pressure over the short-term, as we see
a firmer dollar, resilient equity markets, rising interest rates
and slightly more quieter geopolitical conditions, all combining
to keep serious rallies in check," INTL FCStone analyst Edward
Meir said in a note.
    In other precious metals, silver        rose 0.6 percent to
$17.04 an ounce, having hit a two-week high of $17.08 earlier.
    Platinum        was up 0.7 percent at $917.75 an ounce and
palladium        was 0.4 percent higher at $933 an ounce.

 (Reporting by Apeksha Nair in BENGALURU; Editing by Tom Hogue
and Subhranshu Sahu)
  

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