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PRECIOUS-Gold rises as weak U.S. data dampens rate hike expectations
May 15, 2017 / 11:16 AM / 7 months ago

PRECIOUS-Gold rises as weak U.S. data dampens rate hike expectations

    * U.S. dollar falls, U.S. bond yields up from 1-1/2-wk low
    * Gold net long falls to six-week low
    * Silver net long at its lowest since February 2016

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Peter Hobson
    NEW YORK/LONDON, May 15 (Reuters) - Gold rose as U.S.
political turmoil, a missile test by North Korea and a worldwide
cyber attack fueled demand for safe-haven assets, while weaker
than expected U.S. data pushed the dollar lower, making gold
cheaper for holders of other currencies.            
    Spot gold        was up 0.2 percent at $1,230.15 an ounce by
2:11 p.m. EDT (1811 GMT), on track for a third day of gains
after hitting an eight-week low of $1,213.81 last week. U.S.
gold futures         settled up 0.2 percent at $1,230.
    "Continued unpredictability of the Trump administration,
North Korea flexing its muscles again and weaker data coming
from the U.S. has helped bring back some interest," said Ole
Hansen, head of commodities strategy at Saxo Bank.             
    Worse than expected U.S. data has reduced expectations of
aggressive interest rate increases by the U.S. Federal Reserve
this year, though traders still expect a rise in June.
                                     
    Higher interest rates tend to boost the dollar       
and push bond yields up, putting pressure on gold prices by
increasing the opportunity cost of holding non-yielding bullion.
    Gold prices pared gains as the U.S. dollar came off its lows
and U.S. 10-year Treasury yields bounced up from a 1-1/2-week
low.       
    "Unless there is more stronger data, more than two rate
hikes are not very likely (this year)," said Argonaut Securities
analyst Helen Lau. 
    Money managers' net longs in COMEX gold fell to the lowest
in six-weeks in the week ending May 9.              
    "The $34/oz decline in gold prices during the week ended 9
May was accompanied by the second-largest weekly decline in
gross long positions," said Standard Chartered in a note.
    Gold demand, meanwhile, has strengthened in China and India,
supporting prices.                      
    In other precious metals, silver        was up 1.1 percent
at $16.63 an ounce, after money managers cut their net long
stance in silver to the smallest since February 2016 from a
record high last month.                 
    Platinum        was up 1.1 percent at $927.48, as producers,
fabricators and traders gathered for Platinum Week in London.
                                      
    The metal used for jewelry and emission-controlling
catalytic converters in diesel vehicles has gained more than 5
percent from a 4-1/2-month low of $889.10 on May 4. 
    The World Platinum Investment Council said on Monday that a
market deficit would shrink this year as demand falls and low
prices discourage investment, while autocatalyst maker Johnson
Matthey said that 2017 would bring the first surplus in six
years.                          
    Palladium        turned down 1.1 percent to $797.40 an
ounce.  

 (Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by Marguerita Choy and David Goodman)
  

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