May 12, 2016 / 9:45 AM / in 3 years

PRECIOUS-Gold slips after best day since April as dollar strengthens

* Prices consolidate below 15-month peak of $1,303.60/oz
    * Gold up 20 pct this year as expectations of Fed rate hike
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    * Global gold demand posts strongest Q1 on record - WGC

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, May 12 (Reuters) - Gold fell on Thursday as
a strengthening dollar prompted some buyers to cash in gains
after its biggest daily rise this month, briefly paring losses
after downbeat U.S. jobs data. 
    Spot gold was down 0.6 percent at $1,269.76 an ounce
at 2:44 p.m. EDT (1844 GMT). The metal had touched a 15-month
high last week at $1,303.60, before slipping back below $1,300. 
    "The weakness in gold which we're experiencing today is
mainly due to the strength in the dollar, and also we're
approaching close to a very important level of $1,300," Naeem
Aslam, chief market analyst at Think Forex, said.
    The yen fell to a two-week low against the dollar on
speculation that the Bank of Japan could expand its monetary
stimulus as soon as next month, helping to lift the dollar index
 0.3 percent. 
    Gold is up nearly 20 percent in 2016 as a run of soft
economic data in the United States and around the world allayed
expectations that the Federal Reserve would press ahead with
interest rate hikes in the near term.
    Rising rates increase the opportunity cost of holding
non-yielding gold, while boosting the dollar, in which it is
priced. 
    Underlining optimism towards the metal, holdings of the
world's largest gold-backed exchange-traded fund, SPDR Gold
Shares, rose to the highest since December 2013 on
Wednesday. 
    "Money flows are strong, the ETF demand is strong and this
is all helping to keep prices in a range," said Bill O'Neill,
co-founder of commodities investment firm Logic Advisors in New
Jersey.
    "We need to close above $1,300 to get the market moving from
a technical perspective. That's a little bit of a stumbling
block at the moment."
    Surging inflows into gold-backed ETFs drove global gold
demand to its highest first-quarter total on record this year at
1,290 tonnes, the World Gold Council (WGC) said, despite a near
20 percent drop in jewelry demand. 
    "It was pleasing to see the strong uptick in physical demand
for gold in the first quarter of 2016 ... especially in Western
financial centers that have effectively been absent for three
years," Old Mutual Gold & Silver Fund manager Ned Naylor-Leyland
said.
    U.S. gold futures for June delivery settled down 0.3
percent at $1,271.20. Spot silver was down 1.8 percent at
$17.08 an ounce, platinum was down 1.2 percent at
$1,049.86, and palladium was down 1.6 percent at $594.80.
    GFMS analysts at Thomson Reuters said that platinum was
likely to have already posted its lows for the year.
 

 (Additional reporting by Manolo Serapio Jr. in Manila; Editing
by Mark Heinrich and Meredith Mazzilli)
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