February 16, 2018 / 12:47 PM / in 8 months

PRECIOUS-Gold prices slip but still head for weekly rise

    * Gold heads for 2.4 pct weekly rise
    * Gains more muted in euro and sterling-priced gold
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (New throughout, updates prices, market activity and comments;
adds second byline, NEW YORK dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, Feb 16 (Reuters) - Gold prices dipped on
Friday, but still hovered near a three-week high, as the U.S.
dollar index bounced from a three-year low and investors worried
that U.S. inflation could heat up.
    The U.S. dollar limped up off a three-year low against a
basket of currencies but still was headed for its biggest weekly
loss in nine months as negative sentiment offset any support
from rising Treasury yields.       
    Spot gold        was 0.3 percent lower at $1,348.58 per
ounce by 2:21 p.m. EST (19:21 GMT), off a three-week peak of
$1,361.76 in early trade. U.S. April gold futures        settled
up $0.9, or 0.1 percent, at $1,356.20 per ounce. 
    Spot gold has risen 2.4 percent so far this week, putting it
on track for its biggest weekly rise since October 2017.
    "Gold is down on the stronger dollar today," Michael
Ellingston trader at U.S. Global Investors in San Antonio. "The
dollar broke through its earlier highs and rose more."
    Gold was little changed for much of the session, but the
rising dollar caused some consolidation, said David Meger,
director of metals trading at High Ridge Futures.
    "But there are still some inflationary concerns in the
market. The overall trend in the dollar remains to the downside
even though we are rebounding today," Meger said.
    Fear that weakness could return to equities is also sparking
safe-haven demand of gold, he added.
    While gold prices have surged in dollar terms, gold has
fared less well in other currencies, up 1 percent when priced in
euros and 1.4 percent in sterling. 
    The dollar has been reeling, with investors wary Washington
might pursue a weak-dollar strategy. Other countries are
considering tighter monetary policy, which could erode the yield
advantage of U.S. fixed-income assets.             
    On the physical side of the gold market, demand in Asia was
muted by the Lunar New Year holiday. In India, physical gold
sold at a discount for the first time in three weeks as demand
slumped. 
    Demand was down to a quarter of usual levels as buyers were
deterred by the recent price rise, said Harshad Ajmera, owner of
wholesaler JJ Gold House in Kolkata.
    Among other precious metals, silver        was down 1.3
percent at $16.66 per ounce, still poised for a 2 percent weekly
rise. Platinum        gained 0.2 percent at $1,003.24 an ounce,
after hitting its highest since Jan. 29 at $1,012.70. It was set
for a 4.3 percent weekly increase.
    Palladium        was up 2.3 percent at $1,040.97 an ounce.
It has risen 6.8 percent this week, its biggest weekly increase
since October. 

 (Additional reporting by Eileen Soreng in Bengaluru; Editing by
David Gregorio and Edmund Blair)
  
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