March 7, 2017 / 10:59 AM / 2 years ago

PRECIOUS-Gold slips to 4-week low on Fed rate hike expectations

    * Markets awaits U.S. February payrolls data on Friday
    * Holdings of biggest gold ETF fall again on Monday
    * GRAPHIC-2017 asset returns:

 (Updates prices, adds comment, second byline, NEW YORK
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, March 7 (Reuters) - Gold hit the lowest
level in more than four weeks on Tuesday as the dollar
strengthened and expectations for a U.S. interest rate hike this
month weighed, though moves were muted ahead of  U.S. payroll
data this week. 
    The precious metal has fallen in five out of the last six
sessions as expectations for the Federal Reserve to push ahead
with a U.S. rate increase this month ramped up. 
    Spot gold        was down 0.9 percent at $1,214.51 an ounce
by 2:52 p.m. EST (1952 GMT), having touched its lowest since
Feb. 3 at $1,213.65 an ounce. U.S. gold futures        for April
delivery settled down 0.8 percent at $1,216.10.
    "The technical rejection at the 200-day moving average last
week, combined with the rapid build up in spec longs that week,
has left gold vulnerable," Saxo Bank's head of commodity
strategy Ole Hansen said. 
    "There is no appetite for buying for gold ahead of a FOMC
rate hike."
    The metal slipped last week after comments from U.S. Federal
Reserve Chair Janet Yellen that the Fed was poised to lift
benchmark U.S. rates were seen as cementing plans for an
increase at the Fed's March 14-15 meeting.            
    Gold is highly sensitive to rising U.S. interest rates, as
these increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar in which it is priced.
    Holdings of the world's largest gold ETF, New York-listed
SPDR Gold Shares      , fell another 3.8 tonnes on Monday,
adding to the previous session's 4.7-tonne decline.          
    "It's people getting out of it ahead of the Fed," said Bob
Haberkorn, senior market strategist for RJO Futures in Chicago.
    "Last week, Yellen pretty much laid it out; they're going to
raise rates next week. The question is, how aggressive are they
going to be and what's the language going to be."
    The dollar and U.S. Treasury yields rose Tuesday after data
showed the U.S. trade deficit grew in January to its widest
monthly level in nearly five years.       
    Investors are now awaiting non-farm payrolls data for
February on Friday, seen as an important barometer of the U.S.
    Silver        was down 1.9 percent at $17.44 an ounce, the
lowest since Feb. 6. 
    "Silver ETFs saw outflows of a good 73 tons yesterday –
their most pronounced daily outflow in nearly two months,"
Commerzbank said in a note. 
    Platinum        was down 1.5 percent at $960.30, after
falling to $954, its lowest since Jan. 20. Palladium        was
0.2 percent higher at $772.

 (Additional reporting by Arpan Varghese and Nallur Sethuraman
in Bengaluru; editing by Louise Heavens and Grant McCool)
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