October 9, 2017 / 10:44 AM / a year ago

PRECIOUS-Gold recoups previous week's losses as dollar steadies

    * China returns to market after Golden Week break
    * Specs cut net longs in gold and silver for 3rd week
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Updates throughout, adds LONDON dateline)
    By Jan Harvey
    LONDON, Oct 9 (Reuters) - Gold rose on Monday, erasing all
of the previous week's losses, as a steadier dollar and the
resilience of a key chart level removed some downward pressure,
while the return of Chinese buyers to the market also lent
    Prices fell for a fourth week to hit a two-month low on
Friday, after an upbeat reading of U.S. wage growth and
unemployment supported expectations for a U.S. interest rate
hike in December, pushing the dollar and Treasury yields higher.
    Gold's resilience above its 200-day moving average at $1,253
an ounce provided some reassurance to buyers, however, helping
it rebound. Meanwhile, the dollar came off the boil, steadying
below a 10-week high, while geopolitical concerns centred on
North Korea and Spain supported prices.
    Spot gold        was up 0.5 percent at $1,281.52 an ounce at
1025 GMT, while U.S. gold futures        for December delivery
were up $8.90 an ounce at $1,283.80.
    "For the time being, gold may have bottomed out," ABN Amro
analyst Georgette Boele said. "On Friday people were very
reluctant to buy dollars, even though there were enough signals
to do so ... and the dollar has come under some pressure again,
which is being reflected currently in gold."
    "The 200-day moving average has proved to be intact still
... so there were some technical elements playing out," she
added. "I think we can go back towards $1,300."
    Expectations for a Fed rate hike, she added, are still
providing some headwinds to gold, which, as a non-yielding
asset, tends to suffer as interest rates rise. 
    China's central bank held off from adding to gold reserves
for an 11th straight month in September, data showed on Monday.
China had been a significant official-sector gold buyer in
previous years.             
    On the physical markets, Chinese buyers returned after the
Golden Week holiday. 
    "The onshore premium pushed toward $10 on the back of
USD/China weakness and continued underlying physical demand kept
price action buoyant throughout the afternoon," MKS said in a
    "The concern for bullion will be the strengthening U.S.
dollar, with the Fed funds futures now pricing in an 80 percent
chance of a December interest rate increase," it said. 
    Speculators cut their net long positions in COMEX gold and
silver contracts for the third straight week, in the week to
Oct. 3.        
    In other metals, silver        was up 0.6 percent at $16.88
an ounce, while platinum        was up 0.4 percent at $916.20 an
ounce and palladium        was 0.8 percent higher at $927.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Dale Hudson)
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