February 6, 2018 / 4:30 AM / 7 months ago

PRECIOUS-Gold rises as equity sell-off spurs safe-haven buying

    * Spot gold may retest resistance at $1,354/oz - technicals
    * Wall Street sees biggest decline since 2011 on Monday
    * Palladium prices hit lowest since Dec 14, 2017

 (Updates prices)
    By Nithin ThomasPrasad
    Feb 6 (Reuters) - Gold prices rose on Tuesday as a rout in
global equities prompted investors to seek shelter in safe
havens such as gold, although expectations of more U.S. rate
hikes this year weighed on the market.
    Spot gold        was up 0.3 percent to $1,342.95 per ounce
at 0722 GMT following Monday's 0.5 percent gain. 
    Prices fell 1.2 percent on Friday, the most since Dec. 7,
2017, after stronger-than-expected U.S. payrolls data shored up
expectations that a pick-up in inflation will spur further rate
hikes this year, boosting the dollar, in which it is priced.   
    U.S. gold futures         for April delivery rose 0.7
percent to $1,345.60 per ounce on Tuesday.
    ANZ analyst Daniel Hynes said he suspected an even bigger
rally in prices considering the correction in the equity
markets.
    "The rate hikes have already been priced in by the market...
but it's certainly got the ability to temper the upside in gold
prices," Hynes said.
    Asian shares fell sharply after Wall Street suffered its
biggest decline since 2011 on Monday as investors' faith in
factors underpinning a bull run in markets began to crumble.
           
    Gold is seen as a safe-haven investment due to its ability
to retain value even at times of financial or political
uncertainty. It is also used as a hedge against inflation.
    Last week, the U.S. Federal Reserve kept interest rates
unchanged but said inflation likely would rise this year and
hinted at "further gradual" rate increases.             
    The yellow metal is highly sensitive to rising U.S. interest
rates, as these increase the opportunity cost of holding
non-yielding bullion, while boosting the greenback. 
    Spot gold may retest a resistance at $1,354 as it seems to
have stabilised around a support at $1,326 per ounce, according
to Reuters technical analyst Wang Tao.             
    Spot silver        rose 0.9 percent to $16.89 per ounce. It
fell 3.7 percent on Friday in its biggest one-day decline since
December 2016.        
    Platinum        gained 0.6 percent to $995.60 per ounce,
while Palladium        was down 1.4 percent to $1,015.40 per
ounce after touching its lowest since Dec. 14, 2017. 
    "The PGMs (platinum group metals) are certainly going to
benefit from the better economic backdrop we're now seeing in
2018. In fact, I think the rest of the complex will certainly
outperform gold in the medium term," Hynes said. 
    Palladium rose to an all-time high of $1,138 on Jan. 15 on
higher automotive demand and supply shortage.             

 (Reporting by Nithin Prasad and Nallur Sethuraman in Bengaluru;
Editing by Joseph Radford and Subhranshu Sahu)
  
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