March 7, 2017 / 3:43 AM / 7 months ago

PRECIOUS-Gold steady amid Fed rate hike expectations

    * Spot gold may break support at $1,223/oz - technicals
    * Holdings of SPDR Gold Trust       fall on Monday

 (Updates prices, adds details and comments)
    By Arpan Varghese
    March 7 (Reuters) - Gold prices were little changed on
Tuesday, hovering above a two-week low hit on Friday, amid
expectations of a U.S. interest rate hike this month and ahead
of key economic data due later in the week.
    The U.S. monthly jobs report due on Friday includes the
non-farm payrolls, seen rising by 190,000 in a Reuters poll.
        . 
    Prices on most U.S. interest rates futures rose modestly on
Monday as traders bet on a strong likelihood the Federal Reserve
will raise rates at its upcoming policy meeting next week.
            
    "We expect the precious metal to have a bumpy ride the rest
of the week as we await further economic indicators from the
U.S. such as the key February jobs numbers on Friday and the Fed
meeting next week," said Mihir Kapadia, CEO and Founder of Sun
Global Investments.
    Spot gold        was mostly unchanged at $1,225.21 per ounce
at 0650 GMT. U.S. gold futures         were also flat at
$1,225.50.
    The metal hit $1,222.51, the lowest since Feb. 15, on Friday
after U.S. Federal Reserve Chair Janet Yellen said that the Fed
was poised to lift benchmark U.S. rates, provided jobs and
inflation data held up, comments seen as cementing plans for an
increase at the Fed's March 14-15 meeting.            
    Spot gold may break a support at $1,223 per ounce and fall
more to the next support at $1,213, probably after a moderate
bounce to a resistance at $1,230, according to Reuters technical
analyst Wang Tao.              
    Higher U.S. interest rates would boost the dollar and make
commodities priced in the greenback costlier for holders of
other currencies. 
    "I think that the rate rise is now in the price more or
less, but the market will be focusing on the language
surrounding the pace of future rate rises," said Nicholas
Frappell, general manager with ABC Bullion.
    The market will also await monetary policy decisions from
the European Central Bank. The ECB will stay in the background
through upcoming elections in key European countries and is only
likely to signal a shift away from its ultra-easy monetary
policy toward the end of this year or early next, a Reuters poll
found.             
    Meanwhile, holdings of the SPDR Gold Trust      , the
world's largest gold-backed exchange-traded fund, fell 0.45
percent to 836.77 tonnes on Monday. Holdings fell for second
straight day on Monday.          
    The steady outflow is putting a lid on prices, MKS PAMP
Group trader Alex Thorndike said.
    "We expect this to continue into the Fed rate decision which
will remain a drag."
    In other precious metals, silver        fell 0.5 percent to
$17.69 per ounce. 
    Platinum        was down 0.4 percent to $970.55, after
hitting $969.90, its lowest since Jan. 27.
    Palladium        was down 0.1 percent to $769.88.

 (Reporting by Arpan Varghese in Bengaluru; Additional reporting
by Nallur Sethuraman; Editing by Vyas Mohan and Subhranshu Sahu)
  

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