February 28, 2018 / 11:47 AM / 19 days ago

PRECIOUS-Gold steadies after sell-off linked to hawkish Fed, strong dollar

    * Spot gold may fall to $1,303/oz - technicals
    * Dollar index rises to highest since Feb. 9 
    * Fed's Powell strikes hawkish tone 

 (Recasts, updates prices; adds comment, NEW YORK to dateline)
    By Renita D. Young and Maytaal Angel
    NEW YORK/LONDON, Feb 28 (Reuters) - Gold prices steadied on
Wednesday after the previous session's more than 1 percent fall
following comments by the Federal Reserve's new chairman that
fueled views the U.S. central bank would raise rates four times
this year rather than three.
    The dollar hit a five-week high versus a basket of
currencies, lifted by Fed Chairman Jerome Powell's upbeat
assessment of the U.S. economy on Tuesday.      
    A strong dollar makes dollar-priced gold costlier for
investors using other currencies.
    Spot gold        was flat at $1,317.94 per ounce by 1:34
p.m. EST (1834 GMT) and was poised to close February down 2
percent. On Tuesday, it hit the lowest since Feb. 9 at
    U.S. gold futures         settled down 70 cents or 0.1
percent, at $1,317.90 per ounce. 
    "Even though the dollar is stronger and Treasury yields are
higher, the gold market oversold itself yesterday, and now we're
recovering a bit," said Walter Pehowich, executive vice
president of investment services at Dillon Gage Metals.
    Powell noted in his speech that recent data had strengthened
his confidence that inflation will rise.             .  
    Inflation generally supports gold, which is considered a
safe store of value when price pressures rise. But raising
interest rates to fight inflation makes the non-yielding metal
less attractive.
    World stocks tumbled as dismal Chinese and Japanese
manufacturing and industrial output data added to the bearish
equities sentiment sparked by the U.S. interest rate hike views
after Powell's comments.            
    Elevated U.S. debt levels and volatility in stocks could
boost gold prices above $1,400 longer-term, according to a
Reuters survey of analysts.             
    Spot gold is expected to break support at $1,317 per ounce
and fall to the next support level at $1,303, as suggested by
its wave pattern and a projection analysis, Reuters technical
analyst Wang Tao said.         
    "People are looking to buy gold on dips, so I think it will
be supported down at $1,300," a Hong Kong-based trader said. 
    Silver        lost 0.2 percent to $16.39 an ounce, close to
a 5.2 percent monthly decline. Palladium        rose 0.8 percent
at $1,043.70, but headed for a 2 percent monthly drop. Platinum
       was flat $983.10 per ounce, after dropping to a two-week
low of $972.50, declining 2 percent for the month. 

 (Additional reporting by Eileen Soreng and Nithin Prasad
Editing by Dale Hudson, Mark Potter and Susan Thomas)
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