March 21, 2017 / 10:53 AM / in 9 months

PRECIOUS-Gold dips as falling dollar fails to offset Asian selling

    * Gold drops $8/oz in less than an hour in Asian trade
    * Holdings of gold funds slip for third day
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices)
    By Jan Harvey
    LONDON, March 21 (Reuters) - Gold dipped on Tuesday as a
weaker dollar only partially offset a price slide in Asian
trading hours, after a failure to overcome chart resistance
prompted speculative selling following a four-day rally.
    Confidence in the metal was also dampened by a third day of
outflows from gold-backed exchange-traded funds, with holdings
of the largest, SPDR Gold Shares      , falling another 3.8
tonnes on Monday.
    Spot gold        was down 0.1 percent at $1,231.89 an ounce
at 1228 GMT, having dropped $8 an ounce in less than an hour
after it touched session highs overnight at $1,235.26. 
    U.S. gold futures        for April delivery were down $2.30
at $1,231.70.
    Some gold holders in China liquidated their positions in
thin trading after the metal failed to break above the previous
day's peak, traders said, close to tough resistance at a
retracement of the metal's February-to-March decline.
    "Gold failed to break through resistance and ran into
selling afterwards," Alexander Zumpfe, precious metals trader at
Heraeus, said. "Resistance is around $1,237/1,238."
    A drop in the dollar to six-week lows versus the euro on
expectations of a more cautious approach to rate hikes from the
Federal Reserve helped lift gold in later trade.        
    Prices were also underpinned by uncertainty over U.S.
President Donald Trump's foreign policies and concerns over the
impact of populist parties on European elections this year.
    Gold rallied in the wake of last Wednesday's less hawkish
than expected Fed policy statement, which dampened speculation
the U.S. central bank would raise interest rates quickly this
year.
    That took prices to $1,235.50 on Monday, their highest since
March 6.
    Gold is sensitive to rising U.S. rates, as these increase
the opportunity cost of holding non-yielding bullion while
boosting the dollar, in which it is priced. It slipped in the
run-up to the Fed's rate hike last week, before rebounding. 
    "The previous two hikes marked cycle lows for gold, and
European election uncertainty, U.S. President Trump's foreign
policies, as well as seasonal demand in India materialising in
April are likely to make Q2 the strongest quarter for gold
prices this year," Standard Chartered said in a note.
    Silver        was down 0.1 percent at $17.39, while platinum
       was 0.4 percent lower at $963.60. 
    Palladium       , bucking the falling trend among other
precious metals, was up 0.4 percent at $782.35, having earlier
touched a three-week high of $785.20 an ounce.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Dale Hudson and Mark Potter)
  

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