November 30, 2016 / 11:20 AM / 9 months ago

PRECIOUS-Gold slides as upbeat U.S. data lifts dollar, oil surges

* Gold set for biggest monthly decline since June 2013
    * Fed's Beige Book shows U.S. economy grew in Oct, Nov
    * Palladium has risen over 23 pct so far this month

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Eric Onstad
    NEW YORK/LONDON, Nov 30 (Reuters) - Gold fell to nearly a
10-month low on Wednesday, adding to its  deepest monthly price
declines in more than three years as strong U.S. economic data
and higher U.S. Treasury yields buoyed the dollar, further
cementing the case for a December rate increase.
    The U.S. dollar rallied 0.9 percent against a basket
of six major currencies, after oil prices rose sharply and
upbeat U.S. economic data and comments by President-elect Donald
Trump's choice for U.S. Treasury secretary triggered a selloff
in the bond market.   
    Spot gold was down 1.2 percent at $1,174.44 an ounce
by 2:40 p.m. EST (1940 GMT), after falling to $1,170.35, the
lowest since Feb. 8. 
    U.S. gold futures settled down 1.4 percent at
$1,170.80 per ounce. 
    U.S. private employers stepped up hiring in November much
more than expected and consumer spending increased last month,
giving more ammunition to the Federal Reserve for an interest
rate increase. 
    Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets such as bullion,
while boosting the dollar, in which it is priced.
    "A consensus appears to be growing among Fed voters that the
economy requires another rate hike, and today's Beige Book
largely confirmed those opinions," said Royce Mendes, director
and senior economist at CIBC Capital Markets in Toronto. He
added that the Fed was likely to raise rates only gradually next
year.
    The U.S. economy continued to expand in October and
November, the Fed said in its Beige Book report, but wages and
prices rose only modestly and the strong dollar weighed on 
manufacturing. 
    Gold has shed more than 8 percent in November, the biggest
monthly fall since June 2013.        
    "Recently there's been a perfect storm against gold with 
higher risk appetite, rising stock markets and bond yields,
massive ETF (exchange traded fund) outflows and the withdrawal
of speculative financial investors," said analyst Daniel
Briesemann at Commerzbank in Frankfurt.
    "Normally lower prices should attract higher demand, but the
Indian situation is putting the brakes on gold buying."
    The shock withdrawal of high-value notes to fight "black
money" in India, the world's second biggest consumer of gold,
has hit gold demand there during the peak wedding season.
 
    Silver fell 0.9 percent to $16.44 an ounce while
platinum eased 0.8 percent to $910.20. 
    Palladium rose 1.1 percent to $768.20. The metal has
risen more than 24 percent this month, its best since February
2008, outperforming other metals. 
    

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

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