November 28, 2016 / 11:35 AM / 9 months ago

PRECIOUS-Gold climbs as dollar and U.S. bond yields retreat

* SPDR Gold holdings down 0.73 pct on Friday
    * Dollar index pulls back from near 14-year highs

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Clara Denina 
    NEW YORK/LONDON, Nov 28 (Reuters) - Gold prices rose more
than 1 percent on Monday, recovering from their lowest levels
since February as the dollar and long-dated U.S. Treasury bond
yields retreated from recent highs.
    Spot gold was up 0.8 percent at $1,192.64 an ounce by
2:44 p.m. ET (1944 GMT), after climbing as high as $1,197.54
earlier in the session. Prices remained within sight of Friday's
9-1/2-month low of $1,171.21.
    U.S. gold futures settled up 1.05 percent at
$1,190.80 per ounce. 
    The metal has fallen nearly 7 percent so far this month, as
the dollar and bond yields benefited from heightened
expectations of enlarged fiscal spending by U.S. President-elect
Donald Trump.
    As gold pays no interest, the rise in returns from U.S.
bonds and other markets is seen as negative for the metal.
    "If oil prices collapse or stay low then inflation won't
pick up as much and there would be less of an incentive to raise
U.S. rates rapidly and the dollar would not be as strong, which
would be supportive for gold," ING head of commodity strategy
Hamza Khan said.
    The dollar was down 0.2 percent against a basket of
six major currencies, while the yield on 10-year U.S. Treasuries
 retreated from last week's 16-month high. 
    "The interest rate hike has been priced into gold but you
could expect further volatility leading up to the rate hike,"
said Maxwell Gold, director of investment strategy at ETF
Securities, noting that the U.S. Federal Reserve is widely
expected to raise U.S. interest rates at its mid-December
meeting.
    Traders also said a directive from the People's Bank of
China to limit gold imports was creating concerns about supply
in the top consumer of the metal and kept premiums in Shanghai
around $22. Gold premiums in China jumped to the highest in
nearly three years last week on supply worries. 
    Demand from South East Asia is also quite good and buying at
lower prices could have driven prices higher, said Cameron
Alexander, an analyst with Thomson Reuters GFMS metals
consultancy.
    SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.73 percent to
885.04 tonnes on Friday. 
    "As long as we continue to see this quite heavy selling in
the ETFs market and strength in the dollar, gold could come
under further pressure," Saxo Bank senior manager Ole Hansen
said. 
    Silver rose 0.5 percent at $16.58 an ounce, palladium
 climbed 1.9 percent to $754.75 and platinum was up
1.9 percent at $920.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Mark Potter and Alan Crosby)

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