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PRECIOUS-Gold steadies as dollar, U.S. Treasury yields pare gains
February 10, 2017 / 10:53 AM / in 9 months

PRECIOUS-Gold steadies as dollar, U.S. Treasury yields pare gains

    * Gold heads for second week of gains, but margin narrows
    * Silver at 3-mth high, palladium at 2-week top
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Rewrites throughout, updates prices; adds comment, second
byline, NEW YORK dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, Feb 10 (Reuters) - Gold steadied on Friday,
but remained below this week's three-month top as the U.S.
dollar and Treasury yields came off their highs after the
currency initially jumped on U.S. President Donald Trump's
promise of a major tax announcement.
    Spot gold        was up 0.02 percent at $1,230.78 an ounce
by 2:24 p.m. EST (1924 GMT), while U.S. gold futures        for
April delivery settled down 0.07 percent at $1,235.90. On
Wednesday, spot gold reached its highest since mid-November at
$1,244.67. 
    Gold prices were on track for a second weekly gain, up 1
percent from late last Friday.
    The dollar        pared gains against a currency basket on
Friday after earlier strength from U.S. President Donald Trump's
pledge to announce a major tax plan within weeks cooled some
market nerves, reinvigorating dollar bulls.       
    Wall Street hit record highs for a second day on hopes of
the business-friendly tax cuts.            
    "The dollar puts a little pressure on gold however the
strength in the equity markets and the strength in the other
precious metals is lifting gold up," said Eli Tesfaye, senior
market strategist for brokerage RJO Futures in Chicago, as gold
prices moved into positive territory.
    "It's really the intermarket relationship that's stabilizing
gold right now."
    Silver        was up 1.5 percent at $17.91 an ounce, after
tapping $17.99, the highest since Nov. 11. Palladium        rose
1.6 percent to $782, after rising to $786.40, the highest since
Jan. 25.
    "Both silver and palladium are up on the day as an improving
China signals a better global economy and gives support to the
more industrial metals of the group," said aid Miguel
Perez-Santalla, vice president of Heraeus Metal Management in
New York.
    Earlier in the session, however, gold prices were lower.
    "The Trumpflation trade is back on the agenda, which is
negative for gold," Commerzbank analyst Carsten Fritsch said. 
    U.S. economic data has also stoked talk that the Federal
Reserve would press ahead with U.S. interest rate hikes sooner
rather than later. U.S. import prices rose more than expected in
January, while initial jobless claims dropped unexpectedly last
week to the lowest in nearly 43 years.                          
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion while boosting the dollar, in which it is priced.
    The major physical markets in Asia were mixed this week as
Indian jewelers stocked up for wedding season, while rising
prices sidelined buyers elsewhere.          
    Platinum        was down 0.6 percent at $1,006.10.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Mark Potter and Cynthia Osterman)
  

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