September 28, 2017 / 10:35 AM / 2 years ago

PRECIOUS-Gold rebounds from 6-week low as dollar drops

    * Gold rebounds from 6-week low
    * Dollar turns down from 6-week top
    * Strong U.S. data fuels rate hike expectations
    * Palladium holds rare premium over platinum
    * GRAPHIC-Platinum/palladium ratio:

 (Recasts, updates prices; adds comment, second byline, NEW YORK
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, Sept 28 (Reuters) - Gold rebounded above a
six-week low on Thursday, as the dollar turned lower and ushered
in short-covering. Bullion was earlier pressured on proposed
U.S. tax reforms and strong economic data that supported the
case for another U.S. interest rate hike this year.             
    Spot gold        was up 0.5 percent at $1,286.60 per ounce
by 4:01 p.m. EDT (2001 GMT), after hitting $1,277.26, its lowest
since Aug. 16. U.S. gold futures         for December delivery
settled up $0.90, or 0.07 percent, at $1,288.70 per ounce, after
touching a five-week low of $1,280.40. 
    "The market was oversold, then got a little consolidation
bounce at the $1,280 level," said Bill O'Neill, partner at Logic
Advisors in Upper Saddle River, New Jersey.
    The dollar turned down from a six-week high. Ten-year U.S.
Treasury yields steadied after rising to a 2-1/2-month high on
expectations of higher U.S. debt and a December interest rate
rise push helped by data pointing to underlying strength in the
U.S. economy.                                        
    "I think it’s going to be a steady, gradual march of higher
(Treasury) yields into year-end, which is not too constructive
for gold," said O'Neill.
    Higher bond returns reduce the attractiveness of
non-yielding bullion. Interest rate increases raise bond yields
and tend to boost the dollar.
    Speculative fund investors were sticking with gold and
demand was underpinned by geopolitical worries over North
Korea's nuclear program and an independence vote in Iraqi
Kurdistan, said Saxo Bank analyst Ole Hansen.             
    Technical Fibonacci support for gold was at $1,281.30,
analysts at ScotiaMocatta said. The 100-day moving average was
at $1,271.    
    In other metals, platinum        was up 0.4 percent at
$919.24 per ounce, earlier dipping to a more than two-month low
at $910.50.
     Palladium        was up 0.4 percent at $931.00 per ounce.
    For the second consecutive day, palladium prices rose above
platinum, after speculators piled into the market.             
    Both metals are primarily consumed by automakers for
catalytic converters, but platinum is more heavily used in
diesel vehicles that have fallen out of favor.
    "In the long run, we believe palladium and platinum could
trade at similar levels," said Samson Li, an analyst with
Thomson Reuters GFMS.
    "The strength of palladium this year is due to the strong
performance of the Chinese auto sector. Sales have been better
than expected ... Palladium is like a growth stock while
platinum is like a value stock now," Li said.  
    Silver        was up 0.4 percent at $16.80 per ounce after
dropping to $16.64, its lowest since Aug. 16.

 (Additional reporting by Arpan Varghese and Nithin Prasad in
Bengaluru; Editing by Jon Boyle and Andrew Hay)
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