August 2, 2017 / 4:40 AM / in 6 months

PRECIOUS-Gold edges away from 7-week high as dollar steadies

    * SPDR Gold Trust holdings down over 7 pct in July
    * Silver hits highest in nearly 5 weeks
    * Spot gold may break support at $1,264/oz -technicals

 (Adds detail on SPDR gold fund, updates prices)
    By Nithin ThomasPrasad
    Aug 2 - Gold edged lower on Wednesday as the dollar firmed
and as investors took profits after downbeat U.S. data propelled
prices to a seven-week high in the previous session.
    "At the moment, the upside looks a little bit limited. We're
seeing obviously some increase ... in net long-positioning in
the market, but we're seeing some selling come through on the
ETF side as well," said ANZ analyst Daniel Hynes, referring to
exchange traded funds.
    "So it's going to be difficult for gold to break out of
(its) range for the next week or two."
    Spot gold        had fallen 0.2 percent to $1,265.80 per
ounce at 0638 GMT. The day before, it hit its highest since June
14 at $1,273.97. 
    U.S. gold futures         for December delivery declined 0.6
percent to $1,272.30 per ounce.
     A gauge of U.S. factory activity slid from a near
three-year high in July amid a slowdown in new orders, and
consumer spending barely rose in the prior month, setting the
stage for a moderate economic expansion in the third quarter.
    "I think investors are probably looking for some further
evidence of stronger inflation numbers before they get a little
bit more optimistic about a rate hike, which would clearly be a
headwind for gold prices if the probability of that starts to
rise," Hynes said.
    The largest gold-backed exchange-traded-fund (ETF), New
York's SPDR Gold Trust,                , saw holdings decrease
by over 7 percent in the month of July, the biggest monthly
outflow since April 2013.          
    The fund has seen outflows of over 24 tonnes since July 21.
    The dollar clung to modest gains on Wednesday after bouncing
from 15-month lows, benefiting from a pause in selling of the
battered currency as investors begin positioning for key events
this week, notably Friday's U.S. employment report. 
    For potential impact on the dollar, the market was also
waiting for the U.S. ADP jobs report and comments by San
Francisco Fed President John Williams and Cleveland Fed chief
Loretta Mester later in the session.           
    Spot gold may break support at $1,264 per ounce and fall to
the next support level at $1,258, as suggested by its wave
pattern and a Fibonacci retracement analysis, according to
Reuters technical analyst Wang Tao.             
    Meanwhile, silver        slipped 0.6 percent to $16.60 per
ounce. It touched its highest since June 29 earlier in the
    Platinum        edged down 0.1 percent to $942.90 per ounce,
after rising to its highest in seven weeks earlier in the day. 
    Palladium        drifted 0.3 percent lower to $889.60 per
ounce. In the previous session, it marked its highest since June

 (Reporting by Nithin Prasad and Arpan Varghese in Bengaluru;
Editing by Richard Pullin and Joseph Radford)
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