December 19, 2017 / 10:44 AM / 10 months ago

PRECIOUS-Gold dips as U.S. Treasury yields rise on housing starts

    * Gold in narrow range in last quarter of 2017
    * Biggest ETF reports 7.1-tonne outflow on Monday
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Recasts, updates prices; adds comment, NEW YORK dateline,
byline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, Dec 19 (Reuters) - Gold dipped on Tuesday
as U.S. Treasury yields rose on an uptick in housing starts for
November and even though the dollar fell, a factor that
generally supports gold.
    Market players were wary of taking new positions before the
holiday season. Gold is on track to post its narrowest trading
range of any quarter in a decade in the last three months of the
year. 
    Spot gold        was down 0.04 percent at $1,260.86 an ounce
by 1:49 p.m. EST (1849 GMT), earlier hitting a nearly two-week
high of $1,265.20, while U.S. gold futures        futures for
February delivery settled down $1.30, or 0.1 percent, at
$1,264.20 per ounce. 
    U.S. Treasury yields hit session highs and the yield curve
steepened as U.S. housing starts unexpectedly rose in November.
                       
    "That prompted rates to move higher and the U.S. dollar was
up as a result," but edged lower later, said Bart Melek, head of
commodity strategy at TD Securities in Toronto.
     Higher bond yields make non-yielding bullion less
attractive to investors. They also tend to boost the U.S.
dollar, but "investors are adjusting positions ahead of the
holiday weekend, so there's some ambiguity right now," Melek
said.
    Caution about pending U.S. tax legislation pressured the
dollar, traders said. Congress appeared all but certain to pass
the bill.              World stocks dipped with investors taking
profits after recent highs in the tech sector before Republican
lawmakers achieve their goal of passage.            
    The dollar eased against the euro, as investors were
cautious about how much the tax reforms, if passed, would boost
the U.S. economy.       
    "The (gold) market is trying to move higher ... (as) the
euro/dollar is trying to move above $1.18 again," ABN Amro
analyst Georgette Boele said, though she added that moves were
still relatively small. "Liquidity is drying up a bit."
    Holdings of the world's largest gold-backed exchange-traded
fund, New York-based SPDR Gold Shares      , fell 7.1 tonnes on
Monday, their largest one-day outflow since late July, cutting
its inflow for the year to 15 tonnes.          
    Among other precious metals, silver        was down 0.5
percent at $16.05 an ounce, after seeing a two-week high of
$16.22.
    Platinum        was up 0.8 percent at $914 an ounce, earlier
hitting a two-week high of $919.40. The metal has rallied nearly
$30 an ounce in the last two trading sessions. 
    Palladium        was up 0.6 percent at $1,023.95 an ounce.

    
 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
David Gregorio and Edmund Blair)
  
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