October 27, 2017 / 10:40 AM / 2 months ago

CORRECTED-PRECIOUS-Gold rises on safe-haven appeal after Catalonia declares independence

 (Corrects spelling of name in paragraph 3 to Dan Hussey, not
Dan Huffey)
    * All precious metals headed for weekly decline
    * Dollar pares gains but still near 3-mnth high
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, Oct 27 (Reuters) - Gold edged higher on
Friday, reversing earlier losses after the Catalonian
parliament's independence declaration from Spain led investors
to seek safety from political upheaval.
    Catalonia's declaration was in defiance of the Madrid
government, which was preparing to impose direct rule over the
region.             
    "Catalonia is a small microcosm of the total European
situation. But what it represents is the idea of an unstable
European Union," said Dan Hussey, senior market strategist at
RJO Futures in Chicago. 
    "(These are) all reasons why we would look for a safe haven
like gold to rally," he added.
    Bullion is often used as a safe haven in times of
geopolitical and economic uncertainty, while riskier assets such
as equities are generally sold off.
    Spot gold        was up 0.3 percent at $1,270.36 an ounce by
2:02 p.m. EDT (1802 GMT), heading for its second consecutive
weekly decline. Gold had earlier dropped to a three-week low of
$1,263.35. 
    U.S. gold futures         for December delivery settled up
$2.20, or 0.2 percent, at $1,271.80 per ounce.
    "Gold went up on the back of the Catalonia independence, but
I still think it's not going to last long because the dollar is
still trading at high levels," said Forex.com analyst Fawad
Razaqzada.
    The dollar index        came off its session high on a
Bloomberg report of U.S. President Donald Trump eyeing Federal
Reserve Governor Jerome Powell as his pick to head the U.S.
central bank.             
    Yet, the greenback was still trading near a three-month
high, limiting gold's gains as it makes dollar-priced
commodities costlier for non-U.S. investors.
    According to a Politico report, Trump's search for the next
Fed chair has come down to Fed Governor Jerome Powell and
Stanford University economist John Taylor.             
    "The market is not pricing in more aggressive rate hike from
the Fed even given a potential change in leadership next year.
We are likely to see the same rate hike path," ETF Securities
commodity strategist Martin Arnold said.
    Elsewhere, the U.S. House of Representatives helped pave the
way on Thursday for deep tax cuts sought by Trump and Republican
leaders, underpinning the greenback.             
    Holdings of the world's largest gold-backed exchange-traded
fund, New York-listed SPDR Gold Shares      , fell by 1.2 tonnes
on Thursday, data from the fund showed, its first outflow in
more than two weeks.             
    Silver        rose 0.1 percent at $16.77 per ounce, platinum
       dipped 0.7 percent at $910.85 an ounce, while palladium
       slipped 0.1 percent at $967.50 an ounce.
    All three metals were on track for weekly declines.  

    
 (Additional reporting by Arpan Varghese in Bengaluru; Editing
by David Holmes and Diane Craft)
  

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