October 2, 2017 / 2:13 PM / 2 years ago

PRECIOUS-Gold slips to 7-week low as U.S. 10-year yields rise

    * Dollar gains as U.S. yields hit highest since mid-July
    * Spanish tensions pressure euro
    * Platinum hits lowest since mid-July

 (Updates prices, adds comment, byline, NEW YORK to dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, Oct 2 (Reuters) - Gold fell to its lowest
in nearly seven weeks on Monday as rising U.S. Treasury yields
pushed the dollar higher while concern over violence during
Catalonia's independence vote at the weekend weighed on the
    "The recent sell-off is mostly related to a stirring of the
reflation trade following the announcement by the Trump
administration of the long-awaited tax reform proposal,"
Mitsubishi analyst Jonathan Butler said. 
    Spot gold        was down 0.4 percent at $1,273.78 per ounce
by 1:46 p.m. EDT (1746 GMT), after touching $1,270.60, the
lowest in nearly seven weeks. U.S. gold futures        for
December delivery settled down $9, or 0.7 percent, at $1,275.80
per ounce.
    "The funds have been seeing liquidation," said George Gero,
managing director of RBC Wealth Management in New York.
    World stock markets climbed on Monday on optimism over the
corporate earnings outlook and U.S. President Donald Trump's tax
reform plan, while the U.S. dollar        gained after a
manufacturing index rose to its highest since 2004.             
    Benchmark U.S. 10-year Treasury note yields             hit
their highest since mid-July on expectations that the Federal
Reserve will increase U.S. interest rates for a third time this
year, upbeat U.S. data and talk of a possibly more hawkish
successor to Fed Chair Janet Yellen.                  
    The euro also came under pressure after Spanish police used
batons and rubber bullets in an effort to thwart an independence
vote in Catalonia on Sunday, injuring hundreds. The euro zone
single currency was down 0.6 percent versus the dollar       .
    Rising yields typically make bonds more attractive compared
to gold while strength in the dollar makes assets priced in the
U.S. currency more expensive for buyers holding other
    Among other metals, silver        was down 0.1 percent at
$16.59 an ounce after marking its lowest since Aug. 9. Platinum
       rose 0.5 percent at $914.10 per ounce, after hitting its
lowest since mid-July. 
    Palladium        was down 2.3 percent at $913.00 per ounce.
   Platinum held in a historically unusual discount to sister
metal palladium for a fourth session.                 
    "There is arguably speculative froth in the palladium price,
so a short-term correction is likely," GFMS analyst Ross
Strachan told the Reuters Global Gold Forum on Monday.
    "However, the longer-term picture is one where the sharp
downward path for stocks of palladium mean that eventually (it)
is likely to reach a sustained premium over platinum. Our new
forecasts show that on an annual average basis we expect
palladium to exceed platinum in 2019."

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
David Goodman and James Dalgleish)
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