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PRECIOUS-Gold slips before Fed; platinum flat on S.Africa wage offer
June 17, 2014 / 10:52 AM / 3 years ago

PRECIOUS-Gold slips before Fed; platinum flat on S.Africa wage offer

* S.Africa platinum producers, union agree ‘in principle’ wage offer

* Gold falls after hitting 3-week high in previous session

* Fed’s two-day policy meeting begins later in the day (Updates prices, adds comment)

By Clara Denina

LONDON, June 17 (Reuters) - Gold fell on Tuesday as geopolitical concerns eased and investors assessed U.S. data before a Federal Reserve meeting, while platinum traded flat as details of a wage pact for South African mines remained outstanding.

Anglo American Platinum, Impala Platinum, Lonmin and union AMCU have agreed on a wage deal to end a five-month strike, but the timeframe and additional benefits are unresolved, a spokesman for Impala Platinum said.

Spot platinum was up 0.2 percent at $1,432.30 an ounce by 1411 GMT. The metal gained just 4.6 percent throughout the strike, reflecting an abundance of above-ground stocks, analysts said.

“After the announcement of the union last Thursday that the deal was imminent, there was an immediate market reaction ... so I expect that when the deal is concluded and sealed, then prices wouldn’t really move much,” Quantitative Commodity Research director Peter Fertig said.

Spot gold fell 0.3 percent to $1,267.35 an ounce, retreating from a three-week high of $1,284.85 hit on Monday, when turmoil in Iraq and Ukraine supported its safe-haven appeal relative to higher-risk assets such as equities.

“When gold is driven by geopolitical news, there’s a tendency that this has to keep getting worse for gold to improve,” Macquarie analyst Matthew Turner said. “If news stabilises, gold tends to fall back.”

Militants have routed Baghdad’s army and seized the north of the country in the past week, threatening to dismember Iraq and unleash all-out sectarian warfare with no regard for national borders.

U.S. and Iranian officials discussed the crisis in Iraq on the sidelines of separate negotiations about the Iranian nuclear programme in Vienna.

“Market participants no longer appear to rate the geopolitical risks quite as highly as before, meaning that gold is in less demand as a safe haven,” Commerzbank said in a note.

“Presumably it has been financial investors above all who have taken advantage of the latest increase in the gold price to grab profits while they can.”

Gold investors were also monitoring U.S. data ahead of the Fed meeting, which is seen as bearish for the metal due to prospects for a slightly hawkish outcome, Macquarie’s Turner said.

The Fed’s two-day policy meeting begins later in the day, with a statement expected on Wednesday. The U.S. central bank is expected to press on with its $10 billion-a-month reductions in stimulus but markets are on the watch for any signals on when the Fed might begin raising interest rates.

Data on Tuesday showed that U.S. housing starts and building permits fell more than expected in May, while consumer prices recorded their biggest increase in more than a year last month as costs for a range of goods and services rose.

Sentiment towards gold was bearish as holdings of SPDR Gold Trust, the top gold-backed exchange-traded fund, dropped 4.20 tonnes to a near five-year low of 782.88 tonnes on Monday, posting its biggest outflow since mid-April.

Among other precious metals, silver was up 0.2 percent at $19.65 an ounce, while palladium gained 0.3 percent at $812.10 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Dale Hudson)

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