December 8, 2017 / 11:33 AM / 10 months ago

PRECIOUS-Dollar rise pushes gold toward biggest weekly fall since May

    * Gold on track for third weekly fall, down 2.6 pct
    * Platinum drops to lowest since February 2016
    * Dollar rises on U.S. tax reform progress
    * U.S. payrolls suggest Fed to raise rates next week

 (Recasts; updates prices, adds comment, byline, NEW YORK
dateline)
    By Marcy Nicholson and Peter Hobson
    NEW YORK/LONDON, Dec 8 (Reuters) - Gold prices hovered above
a four-month low on Friday and were on track for their biggest
weekly fall since May after progress on U.S. tax reform fueled
optimism about the U.S. economy and boosted the dollar.
    Stronger-than-expected U.S. employment data on Friday also
demonstrated healthy economic growth and suggested the Federal
Reserve will raise interest rates next week, as expected.             
    Spot gold        was up 0.1 percent at $1,247.81 an ounce by
2:34 p.m. EST (1934 GMT), near Thursday's low of $1,243.71, the
weakest since July 26. It has fallen 2.6 percent so far this
week, its third consecutive weekly fall and the biggest since
early May.
    U.S. gold futures         settled down 0.4 percent at
$1,248.40.
    "Gold's luster was tarnished this week, not only by its
failure to react at all positively to Trump's contentious
Jerusalem announcement but also by its unseemly retreat through
the bottom of a five month range," said Tai Wong, head of base
and precious metals trading at BMO Capital Markets in New York.
    "Bullion stabilized somewhat today, helped by weak earnings
in the U.S. employment report with bulls now pinning their hopes
on a dovish hike by the Federal Reserve next week."
    The U.S. Fed is expected next week to announce a rise in
interest rates and offer guidance on the pace of further
increases. It has previously forecast three rate hikes in 2018.
    That is likely to pressure gold prices because rising
interest rates push up bond yields, reducing the appeal of
non-yielding gold, and tend to boost the dollar. 
    Wall Street and other major global stock markets rose, and
the U.S. dollar was on pace for its fifth day of gains after the
jobs data.            
    Selling of gold was triggered this week after it broke below
$1,260, the bottom of its trading range since September, and
plunged below its 200-day moving average for the first time
since July.
    "You can put it down to the strength of the dollar and the
ebullience of investors regarding equities and all things
risk-on," said ETF Securities analyst Martin Arnold. 
    "When in such a positive mindset investors don't look for
defensive assets like gold."
    Among other precious metals, platinum        was down 0.8
percent at $895 an ounce after falling to the lowest since
February 2016 at $878.50. It was and on track to fall 5.5
percent this week, its biggest weekly loss in 13 months.
    Silver        was up 0.5 percent at $15.81 but down nearly 4
percent this week. Palladium        was 0.6 percent lower at
$1,007 an ounce.

 (Additional reporting by Apeksha Nair in Bengaluru; editing by
David Evans and Susan Thomas)
  
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