July 2, 2018 / 7:13 AM / 2 months ago

PRECIOUS-Gold prices edge lower as dollar firms

    * Dollar hits fresh 6-week high vs yen
    * Platinum hits lowest since Jan. 2016
    * Specs cut net long positions in gold, silver in week to
June 26
    * SPDR holdings fell to lowest since Aug. 2017

 (Adds comment, details and updates prices)
    By Karen Rodrigues
    BENGALURU, July 2 (Reuters) - Gold prices edged lower on
Monday as the dollar firmed after last week's U.S. inflation
data supported the Federal Reserve's outlook for future interest
rate increases.
    Spot gold        was 0.3 percent lower at $1,248.98 an ounce
as of 0644 GMT. 
    U.S. gold futures         for August delivery were down 0.3
percent at $1,250.20 an ounce.
    The dollar strengthened against a basket of currencies
       and extended its gains against the yen to hit a fresh
six-week high of 111.06 yen       , supported by the relative
strength of the U.S. economy and on prospects of further rate
hikes from the Federal Reserve.       
    "Monetary policy re-normalization induces the strength in
the dollar and with that weakening gold prices," said Mark To,
head of research at Hong Kong's Wing Fung Financial Group.
    The risk-aversion demand is not as significant as the impact
of expected interest rate increases, To said.
    U.S. consumer prices accelerated in the year to May, with a
measure of underlying inflation hitting the Federal Reserve's 2
percent target for the first time in six years, data showed on
Friday. 
    The rise in price pressures will probably not shift the Fed
from its stated path of gradual interest rate increases as
policymakers have indicated they would not be too concerned with
inflation overshooting its target.             
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion, while boosting the greenback.
    "With the USD gaining traction as the safe-haven asset of
choice amid the rising trade tensions, investor demand for gold
has been soft," ANZ said in a note.
    Spot gold        may edge up into a narrow range of
$1,254-$1,258 per ounce, before resuming its downtrend, Reuters
technicals analyst Wang Tao said.         
    Hedge funds and money managers cut their net long positions
in COMEX gold and silver contracts in the week to June 26, U.S.
Commodity Futures Trading Commission (CFTC) data showed on
Friday. 
    Speculators cut their net long position in COMEX gold by
19,328 contracts to 4,186 contracts, CFTC data showed. This was
the weakest position since January 2016.        
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.18 percent to 819.04
tonnes on Friday, the lowest since late August.           
    Among other precious metals, platinum        slid 0.8
percent at $840.70 per ounce, it hit its lowest since January
2016 at $835.50, earlier in the session.
    Spot silver        fell 0.6 percent at $15.98 an ounce and
palladium        was 0.5 percent lower at $947.76 an ounce.

 (Reporting by Karen Rodrigues in Bengaluru
Editing by Amrutha Gayathri and Sunil Nair)
  
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