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PRECIOUS-Gold hits 10-month low after biggest monthly drop in 3 years
December 1, 2016 / 3:31 PM / a year ago

PRECIOUS-Gold hits 10-month low after biggest monthly drop in 3 years

* Gold slid 8 pct in Nov as bond yields, dollar surged
    * Bond yields still rising in Europe, U.S. after oil rally
    * No. 1 gold ETF saw biggest monthly outflow since 2013
    * GRAPHIC-2016 asset returns: reut.rs/1WAiOSC

 (Adds comment, byline, NEW YORK dateline; updates prices)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, Dec 1 (Reuters) - Gold hit its lowest since
February on Thursday, extending losses after its biggest monthly
decline in more than three years, as a surge in oil prices
boosted bond yields, denting interest in non-yielding gold as an
alternative investment.
    Bullion steadied later in the day as the dollar fell
to new session lows. 
    Spot gold was flat at $1,172.65 an ounce by 2:49 p.m.
EST (1949 GMT), having reached a 10-month low of $1,160.38. U.S.
gold futures for February delivery settled down 0.4
percent at $1,169.40 per ounce. 
    The precious metal fell more than 8 percent in November,
hurt by a jump in the dollar and Treasury yields after Donald
Trump's surprise election to the U.S. presidency led to
speculation that his commitment to infrastructure spending would
spur growth and inflation.
    That pushed the dollar sharply higher, though it retreated
on Thursday. 
    "Gold has effectively gone into a downward spiral, triggered
by the Trump election and the dollar strength that has come
through from that," Oxford Economics analyst Daniel Smith said.
"We see that dollar strength persisting over the next year, so
there are a lot of reasons to think gold is going to struggle."
    Yields on benchmark U.S. 10-year Treasury notes hit
16-1/2-month highs on Thursday and Germany led euro zone
government bond yields higher. 
    "In the near term, gold continues to look fragile, and in
our view the market will likely remain under some pressure ahead
of the December FOMC meeting," said Joni Teves, strategist for
UBS Global Research. 
    The Federal Reserve is widely expected to lift interest
rates for only the second time in a decade at its Dec. 13-14
meeting.
    Gold-backed exchange-traded funds have seen hefty outflows.
Holdings of the largest, New York-listed SPDR Gold Shares,
fell nearly 60 tonnes in November, the most of any month since
May 2013. 
    Silver was 1 percent higher at $16.64 an ounce.
    "We believe silver prices will be better bid later in 2017
(we see a price range of $16.00-$21.50/oz)," said James Steel,
chief precious metals analyst for HSBC Securities in New York,
in a note.
    "We also base our expectations on solid fundamentals, as
mine supply is likely to contract while industrial and jewelry
demand should increase."
    Platinum was up 0.6 percent at $916 after hitting its
lowest since Feb. 5 at $893.50 earlier in the day.
    Palladium was down 2.5 percent at $750.35, after
tapping its highest since June 2015 at $774.60.

    
 (Additional reporting by Apeksha Nair in Bengaluru; editing by
Elaine Hardcastle)

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