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10 months ago
PRECIOUS-Gold little changed, awaiting direction on U.S. rates
October 27, 2016 / 7:45 PM / 10 months ago

PRECIOUS-Gold little changed, awaiting direction on U.S. rates

* Gold has traded in $16 range in last week
    * Platinum off over 2-week highs reached on Wednesday
    * SPDR Gold holdings drop 1.49 pct

 (Updates prices, adds comments, dollar move, NEW YORK dateline;
previously LONDON)
    By Devika  Krishna Kumar and Zandi Shabalala
    NEW YORK/LONDON, Oct 27 (Reuters) - Gold was little changed
on Thursday, pressured by a persistently strong dollar as the
market awaits more signs about the timing of an expected U.S.
interest rate rise from the Federal Reserve.
    Bets that the Fed will raise rates have driven the dollar to
nine-month highs against a basket of currencies this week
and limited gains in gold. The dollar index was about 0.3
percent higher on Thursday.
    Spot gold was up 0.3 percent at $1,270 an ounce by
3:11 p.m. EDT (1911 GMT), while U.S. gold futures ended
the session up 0.2 percent at $1,269.50 per ounce. Spot gold has
traded in a $16 range over the last week.
    "The constant strength in the U.S. dollar serves as an
inhibiting factor to the upside. We were higher, volume was
moderate with little real enthusiasm to speak of," said Bill
O'Neill, co-founder of LOGIC Advisors.
    "I think short term, the interest rate concerns are there
... but long term I still think the market is going to go
higher." 
    Gold is an alternative investment during times of political
and financial uncertainty such as the U.S. presidential election
 in November, while higher interest rates lift the opportunity
cost of holding non-yielding assets and boost the dollar, in
which gold is priced.
    Higher physical demand in India, the world's second-biggest
consumer of gold, is helping prices and preventing a selloff
ahead of an expected Fed interest rate increase in December,
analysts say.    
    Festivals in India, such as Diwali and Dhanteras, when gold
is traditionally given as gifts, are approaching, which is
typically followed by increased demand because of the wedding
season.
    "Physical demand from Asia continues to underpin the market
at present, with gold continuing to consolidate for the time
being between $1,250-75," MKS PAMP Group trader Sam Laughlin
said.
    According to estimates from Macquarie, Chinese gold imports
in September rose 58 percent to $6 billion, or 118 tonnes, from
August but are down 25 percent from a year ago. 
    Strong physical demand for gold is being also countered by
continuing selling by gold exchange-traded funds. 
    SPDR Gold Trust, the world's largest gold-backed ETF,
said its holdings fell 1.49 percent to 942.59 tonnes on
Wednesday. 
    Silver was up 0.1 percent at $17.60 an ounce, while
platinum was up 0.2 percent at $963.75. Platinum rose to
more than a two-week high of $970.80 on Wednesday.
    Palladium fell 1.5 percent to $611.95 per ounce.

 (Additional reporting by Apeksha Nair and Nallur Sethuraman in
Bengaluru; Editing by Alexander Smith and Steve Orlofsky)

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