April 17, 2018 / 10:03 AM / 5 months ago

PRECIOUS-Gold dips as sharper risk appetite lifts equities

    * Shares advance as risk appetite revives
    * Palladium drops from 1-1/2 month highs 
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices, adds LONDON dateline)
    By Jan Harvey
    LONDON, April 17 (Reuters) - Gold fell on Tuesday as sharper
appetite for risk benefited cyclical assets at bullion's
expense, though losses were capped by the dollar's slip to
three-week low against a basket of currencies. 
    Gold rallied to a 2-1/2 month high last week as heightened
tensions over Syria and U.S. sanctions on Russia sparked a drop
in equities and ratcheted up interest in nominally defensive
assets. Those gains, however, have proved hard to maintain.
    Spot gold        was down 0.3 percent at $1,342.77 an ounce
at 1120 GMT, while U.S. gold futures         were down 0.5
percent at $1,344.40.
    "All this noise we've been witnessing as of late, whether it
is trade disputes or Syria, has not really moved gold on a
sustainable basis," said Julius Baer analyst Carsten Menke. 
    "The story would be different if these disputes prevailed
and we got a significant slowdown in leading indicators. But it
doesn't seem to me that anybody is really afraid of a material
deterioration in the economic backdrop."    
    A gradual return of risk appetite lifted world shares on
Tuesday, with European stocks climbing 0.4 percent to erase the
previous session's losses.      
    The U.S. yield curve reached its flattest in more than a
decade on Monday after the White House said that U.S. President
Trump would nominate Richard Clarida as Federal Reserve Vice
Chairman, another hawkish voice at the central bank.
                  
    A flatter yield curve typically indicates that the Fed is
planning to lift interest rates in the near term and is often
understood to signal concern over the macroeconomic outlook.
Higher rates tend to weigh on non-yielding bullion. 
    The euro hit a three-week high on Tuesday as solid Chinese
economic data and receding fears of more U.S. strikes in Syria
revived risk sentiment, weakening the dollar.       
    On Monday Trump also accused Russia and China of devaluing
their currencies while the United States raises interest rates.
            
    Among other precious metals, silver        was up 0.1
percent at $16.62 an ounce, while platinum        was 0.1
percent higher at $924.90. 
    Palladium        was down 1.6 percent at $985.97 an ounce
after hitting its strongest since March 1 the day before at
$1,012.10 an ounce. 
    It rallied nearly 10 percent last week, the biggest weekly
gain since January 2017, on fears that U.S. sanctions on Russia
could hurt supply of the autocatalyst metal.
    "Palladium has gained by $100, or 11 percent, since the U.S.
sanctions were announced on April 6," Commerzbank said in a
note.  

 (Reporting by Jan Harvey; additional reporting by Swati Verma
in Bengaluru; editing by David Goodman and Jason Neely)
  
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