March 27, 2019 / 4:48 AM / 3 months ago

PRECIOUS-Gold steadies as firm dollar offsets safe-haven appeal

* U.S. dollar at 2-week high, capping gold’s gains

* Market eyes Sino-U.S. trade talks, Brexit vote

* GRAPHIC-2019 asset returns: (Updates prices, adds graphic)

By K. Sathya Narayanan

March 27 (Reuters) - Gold steadied on Wednesday, after declining the most in nearly two weeks in the previous session, as a firm dollar offset bullion’s gains emanating from fears of a possible recession in the United States.

Spot gold was flat at $1,315.11 per ounce as of 0820 GMT. U.S. gold futures were down 0.1 percent at $1,313.20 an ounce.

Falling Treasury yields has given the market sufficient reason to take some hedging measures, which along with weaker-than-expected U.S. data has supported the non-interest bearing gold, said Margaret Yang, a market analyst with CMC Markets, Singapore.

“Investors are very cautious on Treasury yield curve inversion, which had proven many times as early signal for a recession.”

U.S. homebuilding fell more than expected in February, while consumer confidence ebbed in March, offering more evidence of a sharp slowdown in economic activity early in the year.

Asian shares were steady as investors tried to come to terms with a sharp shift in U.S. bond markets and the implications for the world’s top economy.

Though benchmark 10-year note yields were steady above their lowest level since December 2017, the yield curve was inverted by around four basis points.

Uncertainties around Brexit are also increasing bullion’s safe haven appeal, analysts said. The next Brexit vote is due later in the day.

Limiting gold’s gains was a stronger U.S. dollar, which rose 0.2 percent, to its highest in two weeks.

“If dollar continues to strengthen that could put pressure on gold,” Yang said.

The Sino-U.S. trade negotiations scheduled to start on Thursday in Beijing are also watched keenly.

“There is a strong hurdle at higher levels close to $1,325 per ounce mark which may lead to some consolidation in gold prices,” said Sugandha Sachdeva, vice-president, metals, energy and currency research, Religare Broking Ltd.

“But once that is taken out convincingly, further run-up in prices towards $1,350 per ounce looks plausible.”

Among other precious metals, palladium was flat at $1,540.90 per ounce.

Silver dipped 0.2 percent to $15.39, while platinum added 0.8 percent to $861.84 an ounce.

Reporting by K. Sathya Narayanan and Swati Verma in Bengaluru; Editing by Gopakumar Warrier and Shreejay Sinha

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