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PRECIOUS-Gold dips as dollar gains after U.S. Senate clears tax reform hurdle
October 20, 2017 / 4:38 AM / a month ago

PRECIOUS-Gold dips as dollar gains after U.S. Senate clears tax reform hurdle

    * Spot gold down 1.6 pct for the week
    * Spot gold may be rangebound between $1,278 and $1,291/oz -
techs
    * Support for spot gold seen at $1,280 - analyst

 (Updates prices)
    By Apeksha Nair
    Oct 20 (Reuters) - Gold prices turned lower on Friday as the
dollar regained ground after the U.S. Senate approved a budget
plan for the 2018 fiscal year that will ease passage for
Republicans to pursue a tax-cut package without Democratic
support.
    Spot gold        had declined by 0.4 percent to $1,284.06 an
ounce by 0700 GMT. It was down 1.6 percent for the week.
    U.S. gold futures         for December delivery were down
0.3 percent at $1,285.50 per ounce.
    The Republican-controlled Senate voted for the budget
measure late on Thursday by 51-to-49, which would add up to $1.5
trillion to the federal deficit over the next decade in order to
pay for proposed tax cuts.             
    "The dollar is up on account of the Senate vote... which in
turn could pave the way for introducing a tax reform bill. That
is seen as a cause for higher (interest) rates," INTL FCStone
analyst Edward Meir said.    
    The U.S. Federal Reserve is widely expected to raise its
benchmark interest rate for the third time this year in
December. Higher rates tend to boost the dollar, putting
pressure on the greenback-denominated gold.
    Meanwhile, a report that Trump was leaning toward Fed
Governor Jerome Powell, who is perceived as a less hawkish
candidate, as the next Fed chair had weighed on the dollar
earlier in the session and lent some support to gold prices.
                    
    Trump concluded interviews with the five candidates,
including current chief Janet Yellen, he is considering to chair
the Fed and could announce a decision as early as next week, a
source familiar with the process said on Thursday.             
            
    "The (gold) market has been fairly quiet lately. There has
been some profit-taking. Importantly, there are no known
headlines from North Korea or Iraq," OCBC analyst Barnabas Gan
said.
    Geopolitical risks can boost demand for safe-haven assets
such as gold and the Japanese yen.
    "The ongoing Fed balance sheet tapering does give something
for gold prices to point south into the year-end," said Gan,
adding that the most immediate support level for the metal would
come in at $1,280.
    Elsewhere, the European Central Bank will say on Oct. 26 it
will start trimming its monthly asset purchases to 40 billion
euros from 60 billion euros in January, a Reuters poll found.
            
    Spot gold may be rangebound between $1,278 and $1,291 per
ounce for one day before seeking its next direction, Reuters
technicals analyst Wang Tao said.             
    Silver        slipped 0.2 percent to $17.17 an ounce.
    Platinum        edged up 0.1 percent to $922.50 an ounce and
palladium        was up 0.5 percent at $963.25 an ounce.
    All three precious metals were headed for a weekly decline.

 (Reporting by Apeksha Nair in Bengaluru; Editing by Subhranshu
Sahu)
  

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