July 13, 2018 / 4:13 AM / 8 days ago

PRECIOUS-Gold prices subdued as dollar extends gains

    * Spot gold down 0.7 percent for the week
    * Dollar hits six-month high vs yen
    * SPDR Gold holdings down 0.5 pct on Thursday 

 (Adds comment, updates prices)
    By Apeksha Nair
    BENGALURU, July 13 (Reuters) - Gold prices were muted on
Friday, stuck in a tight trading range, as the dollar extended
rally from the previous session when strong U.S. inflation data
and trade war concerns boosted demand for the greenback. 
    Spot gold        was down 0.1 percent at $1,245.54 an ounce,
as of 0652 GMT. For the week, the metal was down 0.7 percent.
    U.S. gold futures         for August delivery slipped 0.1
percent to $1,245.50 an ounce.
    "The dollar has been a prime mover of gold prices...Market
sentiments have been largely positive on the greenback as
investors pivoted from the safe haven asset despite rising
geopolitical risks," said Benjamin Lu, a commodities analyst at
Singapore-based broker Phillip Futures, in a note.
    The dollar was buoyant near a 10-day peak versus a basket of
currencies on Friday, supported by Treasury yields that edged
higher on expectations the U.S. inflation rate will rise.       
    U.S. consumer price data on Thursday showed a steady buildup
of inflation that could keep the Federal Reserve on a path of
gradual interest rate increases.                  
    A stronger dollar and higher U.S. rates reduce demand for
non-interest bearing gold as the metal becomes more expensive
for holders of other currencies.
    Elsewhere, the European Central Bank will keep rates at a
record low for as long as needed to raise inflation, minutes of
the bank's latest meeting showed.             
    Meanwhile, Most Asian share markets rose on Friday, but
China's markets wobbled as investors braced for the impact of
broadening, tit-for-tat Chinese-U.S tariffs.            
    The United States and China could reopen talks on trade but
only if Beijing is willing to make significant changes, U.S.
Treasury Secretary Steven Mnuchin said on Thursday.             
    "The trade war issue is still creating a lot of uncertainty.
If the situation continues and we're not seeing any real
movements in gold prices because of it, we might see prices
actually move lower," said Cameron Alexander, an analyst with
Thomson Reuters-owned metals consultancy GFMS.    
    During times of uncertainty gold prices can receive a boost
as the metal is widely considered a safe-haven asset but bullion
has failed to benefit from recent trade disputes.
    Holdings in SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, dropped 0.48 percent to 795.19
tonnes on Thursday.             
    In other precious metals, silver        fell 0.1 percent to
$15.88 an ounce, after hitting a seven-month low in the previous
session. 
    Platinum        lost 0.6 percent to $833.7 an ounce, while
palladium        was 0.7 percent lower at $942.78.
    All three metals were headed for weekly declines.

 (Reporting by Apeksha Nair in Bengaluru; Editing by Sherry
Jacob-Phillips and Subhranshu Sahu)
  
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