February 22, 2018 / 4:26 AM / 25 days ago

PRECIOUS-Gold dips on steady dollar, U.S. interest rate outlook

    * Dollar index touches its highest in more than a week
    * Spot gold may test a support at $1,316/oz - technicals

 (Adds comments, updates prices)
    By Eileen Soreng
    Feb 22 (Reuters) - Gold prices edged lower for the fifth
straight session on Thursday as the dollar was bolstered by
minutes of the last U.S. Federal Reserve meeting that showed
policymakers backed further interest rate hikes.
    "The high interest rate environment would be key driver that
would drive gold prices lower," said OCBC analyst Barnabas Gan.
    "Since gold remains a zero yielding asset, higher interest
rate environment could stimulate risk appetite and yield-chasing
behaviour," said Gan, whose year-end outlook for gold is at
    Spot gold        was down 0.2 at $1,321.38 an ounce at 0822
GMT, after touching an over one week low of $1,320.61 earlier in
the session. The precious metal has fallen about 2 percent so
far this week. 
    U.S. gold futures         were down 0.6 percent at $1,324.30
per ounce.
    The dollar index       , which measures the greenback
against a basket of major currencies, was up 0.2 percent at
90.160, after it touched a peak of 90.235 since Feb. 12.
    The greenback, which has risen over a percent so far this
week, got a cushion as minutes of the Fed's January meeting
showed most policymakers believed inflation would perk up.
    However, some analysts said concerns about rising inflation
may be tempered by caution due to the recent market volatility. 
    The opposing forces of higher inflation, which is good for
the bullion, and higher interest rates should neutralize each
other and keep gold price pretty steady, said Dominic Schnider
at UBS Wealth Management in Hong Kong.
    Spot gold is expected to test a support at $1,316 per ounce,
a break below which could cause a loss to the next support at
$1,303, according to Reuters technical analyst, Wang Tao.
    "The key level of $1,360 an ounce is likely to keep prices
capped and act as a supply zone," said Sugandha Sachdeva, vice
president of metals, energy and currency research at Religare
Securities Ltd.
    "As long as this is not taken out convincingly, gold prices
may consolidate in near term, with major support in sight at
$1,309 an ounce."
    Among other precious metals, silver        fell 0.4 percent
to $16.43 an ounce, while palladium        was down 0.1 percent
at  $1,019.50 per ounce and platinum        was down 0.5 percent
 at $982.50, its lowest since Feb. 14. 

 (Reporting by Eileen Soreng in Bengaluru, Editing by Richard
Pullin and Vyas Mohan)
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