June 27, 2018 / 5:03 AM / a month ago

PRECIOUS-Gold slips as investors turn to rival safe haven assets

    * Gold hits lowest since Dec. 18 
    * Dollar index off 2-week lows

 (Adds details and updates prices)
    By Karen Rodrigues
    BENGALURU, June 27 (Reuters) - Gold prices hit a fresh
six-and-a-half-month low on Wednesday as the U.S. dollar
steadied and investors turned to other safe-haven assets amid
expectations of more interest rate hikes by the U.S. Federal
Reserve.
    Spot gold        fell for a third straight session and was
down 0.3 percent at $1,255.51 an ounce, as of 0626 GMT, after
hitting its lowest since mid-December at $1,253 earlier in the
session.
    U.S. gold futures         for August delivery were 0.2
percent lower at $1,257.30 per ounce.
    "Gold does not seem to be benefiting from any risks relating
to rising trade tensions, but is experiencing declines from a
firmer dollar and any improvement in equity markets," said John
Sharma, an economist at National Australia Bank.
    "It appears that investors are seeking safe havens in the
U.S. treasuries and currencies such as the Japanese Yen. Near
term, gold will remain under pressure."
    The dollar held steady against a basket of currencies,
having gained 0.4 percent overnight to snap four sessions of
falls to a two-week low.       
    However, it was down 0.1 percent at 109.90 against the yen
      , often sought in times of market turmoil and political
tensions, after earlier touching 110.20. 
    A stronger dollar and higher U.S. interest rates reduce
demand for non-interest bearing gold as the metal becomes more
expensive for holders of other currencies.
    The U.S. House of Representatives overwhelmingly passed a
bill on Tuesday to tighten foreign investment rules, spurred by
bipartisan concerns about Chinese bids to acquire sophisticated
U.S. technology.             
    U.S. President Donald Trump endorsed Treasury Secretary
Steven Mnuchin's measured approach to restrict Chinese
investments in U.S. technology companies.             
    The strong dollar and the prospect of a fourth rate hike
have tempered gold prices, said Ronald Leung, chief dealer at
Lee Cheong Gold Dealers in Hong Kong.
    Dallas Federal Reserve Bank President Robert Kaplan said he
believes the U.S. central bank's monetary policy is still
accommodative and suggested the Fed could raise rates at least
two more times.             
    However, Atlanta Fed bank president Raphael Bostic said
intensifying trade tensions over the last week have raised risks
to the U.S. economy, adding that he may rule out a fourth rate
increase for the year if the trade war gets worse.              
    If the trade war continues, it will affect the global
economy and could eventually push up gold prices, said Leung.
    Meanwhile, spot silver        fell 0.3 percent to $16.20 an
ounce. In the prior session, it hit its lowest since May 1 at
$16.10.
    Platinum        declined 0.8 percent to $858.50 an ounce.
    Palladium        was 0.2 percent higher at $958.15. The
metal touched its lowest since early April at $929.72 on
Tuesday.

 (Reporting by Karen Rodrigues in Bengaluru; editing by Richard
Pullin and Subhranshu Sahu)
  
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