July 18, 2018 / 10:20 AM / 5 months ago

PRECIOUS-Gold steadies after sinking to year-low as dollar eases off highs

    * Silver slips to weakest since July 2017
    * Palladium touches three-month low

 (Recasts; updates prices, headline; adds comment, byline, NEW
YORK to dateline)
    By Renita D. Young and Eric Onstad
    NEW YORK/LONDON, July 18 (Reuters) - Gold prices steadied on
Wednesday as the U.S. dollar eased off a three-week high,
following an earlier drop in bullion to a one-year low as
bullish comments from U.S. Federal Reserve Chair Jerome Powell
boosted the greenback. 
    "The dollar came off a little bit later in trade, causing
gold to go into positive territory, but I think it's temporary,"
said Walter Pehowich of Dillon Gage.
    Gold has shed more than 10 percent since touching a peak of
$1,365.23 an ounce in mid-April, weighed down by a stronger
dollar and rising U.S. interest rates.
    Spot gold        was flat at $1,227.26 per ounce by 2:50
p.m. EDT (1850 GMT), after touching its weakest since July 14,
2017 at $1,220.81.
    U.S. gold futures         for August delivery settled up 60
cents, or 0.1 percent, at $1,227.90 per ounce. 
    "In this environment where we also see oil prices falling,
and so less concern from investors about rising inflation,
that's another negative for the gold price," said Jens Pedersen,
senior analyst at Danske Bank in Copenhagen.             
    Gold is regarded as a hedge against inflation.
    The U.S. dollar slightly eased off a three-week high. It
earlier rose across the board, after Powell gave an upbeat
outlook for the U.S. economy.                    
    Higher interest rates tend to boost the dollar and push up
bond yields, making greenback-denominated gold more expensive
for holders of other currencies and denting its appeal.
    Russia, which dropped off the list of U.S. Treasuries
holders in May, may have increased gold purchases as a result of
recent sanctions imposed by the United States on Russia,
analysts said, but that has yet to help bullion prices.
            
    "Not so much of that is going to turn the market around,"
said Jeffrey Christian, managing partner of CPM Group.
    Longer-term, some analysts expect dollar strength to wane
and possible geopolitical concerns and the heavy weight of gold
bearish positions to help bullion recover.
    "Short positions ... by speculative traders such as hedge
funds are approaching record levels. With the U.S. dollar
expected to eventually roll over and upside pressure to U.S.
bond yields easing, medium- to longer-term buying opportunities
(for gold) should open up," said analyst Carsten Menke at Julius
Baer in Zurich said in a note. 
    Meanwhile, silver        dipped 0.1 percent at $15.56 an
ounce, after touching $15.38, its lowest since July 10 of last
year.
    Platinum        lost 0.2 percent at $814.20 an ounce, after
earlier hitting a two-week low of $798.14.
    Palladium        dipped 0.5 percent at $906.47 per ounce
after hitting $902.97, the weakest since April 9. 

 (Additional reporting by Karen Rodrigues in Bengaluru; Editing
by Bernadette Baum)
  
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