February 8, 2018 / 12:04 PM / in 7 months

PRECIOUS-Gold prices flat, concern over rising interest rates weighs

    * Gold flat, bounces after slide to one-month low
    * Bank of England statement feeds rate-hike jitters
    * Palladium breaks below technical support

 (New throughout; updates prices, market activity and comments;
adds second byline, NEW YORK dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, Feb 8 (Reuters) - Gold prices were flat on
Thursday, slumping early on concern about rising U.S. bond
yields and global interest rates, but buyers emerged to lift
bullion when it hit a technical support level at about $1,312 an
ounce.
    While a strengthening U.S. dollar weighed on gold during the
recent global stock market sell-off, more investors decided to
buy bullion later, when prices touched the support level, said
Michael Matousek, head trader at U.S. Global Investors.
                         
    "Gold came into support at $1,312 and bounced right from
there," Matousek said. "That support comes back from the
late-December and early-January level and the level from
October," Matousek added.
    Between late December and early January, gold prices
rallied, reaching their highest in 1-1/2 years at $1,366.07,
largely on dollar weakness.
    Spot gold        was unchanged at $1,318.12 per ounce by
1:53 p.m. EST (1853 GMT), up off the session low of $1,306.81,
its lowest since Jan. 2. U.S. gold futures         for April
delivery settled up $4.40, or 0.3 percent, at $1,319 per ounce.
    In early trade, inflation-linked U.S. bond yields crept up
close to four-year highs after the Bank of England signaled more
aggressive rate hikes. This fed concern that central banks
around the world will raise interest rates.                   
                         
    "The increase in real bond yields has been pressuring gold,
on top of the rebound we have seen in the dollar," said Julius
Baer analyst Carsten Menke.       
    A stronger dollar makes dollar-denominated bullion more
expensive for users of other currencies. Higher interest rates
reduce the attraction of non-yielding gold. 
    Analysts polled by Reuters said they did not expect the
dollar to rebound this year, despite expectations of at least
three rate rises. The dollar later turned flat.       
            
    Adding to the pressure were comments by Federal Reserve
officials that stock market turbulence was unlikely to derail
U.S. rate hikes this year and that the economy remains strong.
                                                    
    Meanwhile, silver        increased 0.4 percent at $16.43 an
ounce after touching $16.22, the lowest since Dec. 22.
    Platinum        declined 0.4 percent at $976.30 per ounce,
after touching a one-month low at $965. 
    Palladium        dropped 1.9 percent at $965.90 an ounce
after reaching its lowest since Oct. 31 at $964.22.
    Palladium fell below technical support at its 55-day moving
average and broke an eight-month uptrend, Commerzbank analysts
said. The metal, used in catalytic converters to control vehicle
emissions, rose 56 percent last year and to an all-time high in
January.

 (Additional reporting by Nithin Prasad and Nallur Sethuraman in
Bengaluru; editing by Kirsten Donovan and David Gregorio)
  
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