July 20, 2016 / 4:10 AM / 4 years ago

PRECIOUS-Gold falls as dollar firms after robust U.S. data

* Dollar hits over four-month high
    * Palladium hovers below eight-month high hit on Tuesday

 (Adds quotes, updates prices)
    By Sethuraman N R and Vijaykumar Vedala
    BENGALURU, July 20 (Reuters) - Gold fell on Wednesday
finding little impetus from easing equities as the dollar rose
to a four-month high on the back of better-than-expected U.S.
housing data. 
    The dollar firmed on Wednesday, as strong U.S. data and
rising expectations that the Bank of Japan will muster
additional easing steps sent the dollar index to four-month
    Profit-taking weighed on Asian stocks on Wednesday after a
record run on Wall Street showed signs of petering out.
    Spot gold fell 0.5 percent to $1,324.83 an ounce at
0702 GMT. It closed at $1,331.73 on Tuesday.
    U.S. gold was down 0.5 percent at $1,325.60 an
    "Because gold prices have risen so quickly between February
and June, I suppose it is taking a breather at the moment," said
Vyanne Lai, an economist at National Australia Bank.
    "Generally, we do see global environment being relatively
supportive of gold at the current level in the next three months
at least."
    Spot gold is biased to fall to $1,313 per ounce after
completing its consolidation within a small wedge, as per
Reuters technical analyst Wang Tao. 
    U.S. housing starts rose more than expected in June as
construction activity increased broadly, but downward revisions
to the prior months' data pointed to a sector treading water in
the second quarter. 
    "The probability of a U.S. Federal rate hike has increased
as of today. Some expectations of a rate hike have come back,"
said OCBC Bank analyst Barnabas Gan. 
    Gold, which has risen 25 percent this year, is highly
sensitive to rising rates, which increase the opportunity cost
of holding non-yielding assets such as bullion, while boosting
the dollar, in which it is priced.    
    "There are still some headwinds to growth and this may lift
safe-haven demand should the implications of Brexit start to
unwind," Gan said.
    Global risk appetite, which has recovered rapidly from the
Brexit shock late in June, received a sobering reminder after
the International Monetary Fund cut its global growth forecasts
for the next two years on Tuesday, citing uncertainty over
Britain's looming exit from the EU.  
    Among other precious metals, spot silver was down 0.7
pct to $19.75 an ounce.
    Spot platinum was down 0.9 percent at $1,079.50,
while palladium, which touched an eight-and-half-month
high on Tuesday, was down 0.8 percent at $651.

 (Reporting by Nallur Sethuraman and Vijaykumar Vedala in
Bengaluru; Editing by Ed Davies and Sunil Nair)
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