July 15, 2016 / 10:30 AM / 3 years ago

PRECIOUS-Gold on track for first weekly loss in seven

* European shares down after Nice attack
    * Wall Street eases from record highs
    * Palladium touches highest since early November

 (Updates prices; adds comment, second byline, NEW YORK
    By Marcy Nicholson and Clara Denina 
    NEW YORK/LONDON, July 15 (Reuters) - Gold fell on Friday and
was set for its first weekly loss since May on improving global
risk sentiment and a stronger dollar after better-than-expected
U.S. data.
    European shares edged lower after at least 84 people died in
an attack in France, while U.S. Treasury yields jumped as strong
economic data renewed prospects of a Federal Reserve interest
rate hike. U.S. stocks eased from record highs. 
    Spot gold was down 0.5 percent at $1,327.91 an ounce
by 2:48 p.m EDT (1848 GMT), while U.S. gold settled down
0.4 percent at $1,327.40 per ounce. 
    U.S. retail sales rose 0.6 percent in June, compared to an
expected 0.1 percent rise. 
    "In the short term, we can see some more pressure towards
$1,300 as the focus is back on the U.S. after strong economic
data, which increases the probability of a rate hike before the
end of the year," Commerzbank analyst Carsten Fritsch said.
    Higher U.S. rates tend to damage gold prices because they
increase the opportunity cost of holding non-yielding bullion.
    After six weeks of gains, the longest rally since March
2014, the metal has come under pressure this week, down 2.8
percent so far. It was hit by strong U.S. non-farm payrolls data
and as uncertainty around the implications of Britain's Brexit
vote eased with the formation of a new government.  
    "Investors are taking profits, but $1,300 is now a floor for
gold and that is going to hold moving forward," ING Bank senior
strategist Hamza Khan said.
    The dollar was set for its biggest weekly gain
against the yen in 17 years and was up 0.5 percent versus
a basket of six currencies, making gold more expensive to
foreign holders. 
    In Asia, consumers took profits on their gold holdings after
last week's price rally helped bullion hit its highest in more
than two years. 
    Among other precious metals, spot palladium touched 
its highest since early November at $652 an ounce.
    "We favor industrially-oriented precious metals, like
platinum and palladium, which should see larger market
deficits," said UBS Chief Investment Office Wealth Management in
a note, pointing out low interest rates and abundant central
bank liquidity.
    "Our favored precious metal allocation is 60 percent
palladium, 30 percent platinum and 10 percent gold."
    Spot silver was down 1.3 percent at $20.03 an ounce.
It was marginally lower for the week, on track for its first
weekly loss in seven. 
    Spot platinum slipped 1 percent at $1,088.   

 (Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by David Evans and Andrew Hay)
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