September 14, 2017 / 4:08 AM / 10 months ago

PRECIOUS-Gold slips to lowest in nearly 2 weeks, U.S. inflation data in focus

    * Spot gold expected to test support at $1,313/oz-
    * U.S. consumer inflation data due at 1230 GMT
    * North Korea issues new threats over U.N. sanctions

 (Adds detail, updates prices)
    By Apeksha Nair
    Sept 14 (Reuters) - Gold edged down on Thursday to its
lowest in nearly two weeks on waning risk aversion, and as the
dollar steadied ahead of U.S. consumer inflation data that could
offer clues on the timing of further interest rate hikes.  
    Spot gold        was down 0.1 percent at $1,321.24 an ounce
by 0620 GMT, after earlier dropping to its lowest since Sept. 1
at $1,318.75.
    U.S. gold futures         for December delivery fell 0.2
percent at $1,325.10 an ounce.
    "It's really just the dollar driving this at the moment and
risk-on sentiment. Stock markets continue to make historic
highs. It's difficult to hold gold in this scenario," a Hong
Kong-based trader said.    
    Asian stocks inched down on Thursday, consolidating after
touching their highest in a decade.            
    The dollar, which fell to 2-1/2 year low against a basket of
currencies and hit a 10-month low against the yen last week, was
steady ahead of the U.S. inflation report for August, and a
rebound in U.S. producer prices in August had lent some support.
    A stronger greenback makes dollar-denominated gold more
expensive for holders of other currencies.
    "Better-than-expected producer prices in the U.S. raised the
spectre of a stronger Consumer Price Index (CPI) number later
today. That could change the market's view on whether the
Federal Reserve will increase rates later this year," ANZ
analyst Daniel Hynes said in a note.
    Inflation is a key economic factor the U.S. central bank
considers when deciding monetary policy. A strong reading could
raise expectations for future interest rate increases, which
would pressure non-yielding bullion. 
    The Fed has a 2 percent inflation target, and a series of
subdued inflation readings have dampened expectations for
further interest rate hikes this year.
    "We haven't managed to push higher after North Korea," the
trader said, referring to the non-event of a missile launch or
nuclear test from the country over the past weekend when it
marked its founding day. 
    "Down to the $1,300 levels, it (gold) will start running
into some support. You know you can never count them (North
Korea) out of the equation."
    A North Korean state agency threatened on Thursday to use
nuclear weapons to "sink" Japan and reduce the U.S. to "ashes
and darkness" for supporting a U.N. Security Council resolution
and sanctions over its latest nuclear test.                  
    Spot gold is expected to test a support at $1,313 per ounce,
said Reuters technical analyst Wang Tao.             
    In other precious metals, silver        shed 0.5 percent to
$17.64 an ounce. 
    Platinum        was unchanged at $976.85 an ounce, while
palladium        was up 0.2 percent to $938.70.

 (Reporting by Apeksha Nair in Bengaluru; Editing by Joseph
Radford and Richard Pullin)
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