December 5, 2017 / 4:34 AM / a year ago

PRECIOUS-Gold prices range-bound as investors focus on U.S. tax reform

    * Spot gold looks neutral in $1,272-$1,277 range -
    * Markets await U.S. non-farm payrolls data

 (Adds comment, updates prices)
    By Apeksha Nair
    Dec 5 (Reuters) - Gold prices held within a tight range in
Asian trade on Tuesday, amid a steady dollar as investors
awaited the next steps over U.S. tax reform legislation.
    Spot gold        edged 0.1 percent lower to $1,275.06 an
ounce, as of 0814 GMT, holding between $1.277.01 and $1,273.96
so far this session.
    U.S. gold futures         were steady at $1,277.80.
    The dollar was little changed, after climbing to 2-1/2-week
high against the yen on Monday       , after the U.S. Senate
approved a major tax reform bill, moving Republicans and U.S.
President Donald Trump closer to their goal of slashing taxes
for businesses.             
    "Gold is expected to trade in a narrow range between $1,260-
$1,290 per ounce - with near term movements more towards the
lower end of the range. The passage of the U.S. tax bill would
likely boost equities and be detrimental to gold," said John
Sharma, an economist with National Australia Bank. 
    However, an ongoing investigation into contacts between
Trump's election campaign and Russia, after Michael Flynn,
former national security adviser to the President, pleaded
guilty to lying to the FBI, sparked concerns among lawmakers and
weighed on market sentiment.                    
    "Currently, gold is still supported by ongoing geopolitical
tensions and controversies surrounding Michael Flynn," Sharma
    Investors are also looking ahead to the upcoming U.S.
non-farm payrolls report later this week, which will be the last
employment report before the Federal Reserve's monetary policy
meeting next week.
    "The latter will likely result in a rate rise and a modest
downward pressure on gold, since the rate rise decision is
largely priced in by markets," Sharma said.
    The Fed is almost certain to raise interest rates later this
month, according to a Reuters poll of economists, a majority of
whom now expect three more rate rises next year compared with
two when surveyed just weeks ago.             
    Higher interest rates tend to boost the dollar and push bond
yields up, making greenback denominated, non-yielding gold more
expensive for holders of other currencies.
    Spot gold looks neutral in a narrow range of $1,272-$1,277
per ounce, Reuters technicals analyst Wang Tao said.
    In 2018, gold will be pressured by several factors,
including the likelihood of a modest recovery in the dollar,
improvement in the U.S. economy and tightening of monetary
policy by the largest central banks, ABN Amro said in a note.
    "We no longer expect gold prices to rally in 2018," the bank
said, and forecast gold to average $1,375 an ounce next year.
    Meanwhile, silver        was little changed at $16.32 an
    Platinum        ticked up 0.1 percent to $924.80, and
palladium        was up 0.7 percent at $998.50.

 (Reporting by Apeksha Nair and Arpan Varghese in Bengaluru;
Editing by Richard Pullin and Sherry Jacob-Phillips)
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