July 23, 2018 / 11:31 AM / 4 months ago

PRECIOUS-Gold slips towards one-year lows as dollar recovers

    * Dollar resumes rise after Trump intervention last week
    * Trump spat with Iran has little effect on gold prices
    * Gold hovers above strong technical support at
$1,200-$1,220
    * Prices likely to revive towards $1,300 -Reuters poll

 (Updates prices)
    By Peter Hobson
    LONDON, July 23 (Reuters) - Gold prices fell towards
one-year lows on Monday as the dollar continued to strengthen
against the currencies of key bullion consumers China and India.
              
    Gold has tumbled 10 percent since mid-April as a surge in
the greenback made dollar-priced bullion more expensive for
buyers with other currencies.              
    There was some respite for gold last week when U.S.
President Donald Trump branded the dollar's strength as bad for
the economy, knocking the currency from one-year highs, but the
breather proved short-lived.              
    "For gold to rise in a big way, we really need to see the
dollar start to show some weakness," said Saxo Bank analyst Ole
Hansen. 
    Spot gold        was down 0.5 percent at $1,225.41 an ounce
by 1441 GMT, close to last Thursday's low of $1,211.08, while
U.S. gold futures         for August delivery were down 0.5
percent at $1,225.50. 
    A war of words between Trump and Iranian President Hassan
Rouhani helped to lift prices only briefly.
    Trump, in a tweet, told Rouhani on Sunday to "NEVER, EVER
THREATEN THE UNITED STATES AGAIN" after Rouhani said that
hostile U.S. policies towards Tehran could lead to "the mother
of all wars".             
    Geopolitical instability often boosts gold, traditionally
seen as a safe place to invest in times of uncertainty. 
    Gold's plunge in recent months has led banks and brokerages
to downgrade their average gold price forecasts for this year
and next, according to a Reuters poll published on Monday.
            
    But respondents still expect the metal to bounce back
towards $1,300 an ounce. 
    One potential positive is a swing in speculative positioning
that has seen funds' net short on the Comex exchange grow to its
largest since January 2016.                           
    "Such extreme positioning has frequently been an indicator
of a pronounced countermovement in the near future," Commerzbank
analysts wrote. 
    In 2016 the unwinding of the short position between January
and July that year helped to drive up gold by more than $300 to
a two-year high. 
    Gold is also cushioned by technical support around
$1,200-$1,220, including its July 2017 low of $1,204.90, the 50
percent Fibonacci retracement of the 2016 rally and the
psychologically significant level of $1,200.
    Silver        was down 0.4 percent at $15.41 an ounce after
last week's drop to its lowest since July last year. Respondents
to the Reuters poll forecast that silver would rebound and
average $16.70 this year.             
    Platinum        gained 0.1 percent to $827.40 an ounce after
last week touching its lowest since 2008, while palladium       
rose from last week's one-year low and was up 1.4 percent at
$906.48.
    Prices of both metals are likely to recover, with platinum
expected to average $922 an ounce this year and palladium to
average $1,000, a Reuters poll found.             
    

 (Additiongal reporting by Karen Rodrigues in Bengaluru
Editing by Dale Hudson and David Goodman
)
  
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