February 27, 2017 / 11:23 AM / 2 years ago

PRECIOUS-Gold falls from 3-1/2 mth high, Trump speech on the radar

    * Gold fails to hold above 200-day moving average
    * Silver falls from 3-1/2-mth high
    * Better prospects for palladium than for platinum -analyst

 (Recasts, update prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Pratima Desai
    NEW YORK/LONDON, Feb 27 (Reuters) - Gold fell after tapping
a 3-1/2-month high on Monday as U.S. Treasury yields rose and
investors waited for U.S. President Donald Trump to outline
plans for tax cuts, infrastructure spending, levies on imports
and foreign policy.
    Spot gold        turned down 0.1 percent to $1,255.22 an
ounce by 2:43 p.m. EST (1943 GMT), after rising to $1,263.80,
the highest since Nov. 11, but prices failed to hold above the
200-day moving average at $1,260.74.
    U.S. gold futures         settled up 0.04 percent at
$1,258.80.
    Trump is due to address Congress on Tuesday.             
    "What he reveals might be important for gold. For example,
if he announces significant fiscal easing, that would raise
inflation expectations and lead investors into gold," said
Danske Bank analyst Jens Pederson.
    "But the border adjustment tax (import tax) could push the
dollar higher and that could be negative for gold ... The whole
area of foreign policy may mean more political uncertainty and
that's positive for gold."
    Bullion prices briefly rose to 3-1/2-month highs after Trump
said he would propose a budget that would ramp up spending on
defense, but seek savings elsewhere to pay for it.             
    "As far as tomorrow's speech goes, the focus will be on
whether or not Trump can actually lay out the specifics on what
he intends to do," said Shree Kargutkar, associate portfolio
manager at Sprott Asset Management in Toronto.
    Analysts also expect nervousness ahead of elections in the
Netherlands, France and Germany to help to buoy gold prices over
the course of this year but say that U.S. interest rates are
also important.
    Higher U.S. rates could mean a stronger U.S. currency, which
makes dollar-denominated metals more expensive for holders of
other currencies.
    Holdings of the largest gold-backed exchange-traded fund,
New York's SPDR Gold Trust                , have also risen more
than 5 percent this month. 
    Spot silver        fell 0.3 percent to $18.29 an ounce,
after rising to $18.48, the highest since Nov. 11.
    Platinum        gained 0.4 percent at $1,026.99, after
jumping to a five- month high at $1,044.10.
    Palladium        rose 1.7 percent to $781.25.
    Societe Generale sees robust demand for palladium auto
catalysts from Chinese car manufacturers.
    "The average palladium loading on a Chinese gasoline car is
set to grow again as Chinese standards for light duty gasoline
vehicles are implemented nationally," said Societe Generale
analyst Robin Bhar.
    "The demand outlook remains less compelling for platinum due
to its exposure to diesel technology, which remains under
scrutiny from the emissions scandal."

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Louise Heavens and Chizu Nomiyama)
  
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