November 16, 2017 / 11:35 AM / a year ago

PRECIOUS-Gold dips, rangebound as investors digest U.S. tax plan vote

    * U.S. House passes its version of tax cut bill
    * Upbeat U.S. data raise prospect of Fed rate increase
    * Palladium rises for first session in six

 (New throughout, updates prices, market activity and comments;
adds second byline, NEW YORK dateline)
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, Nov 16 (Reuters) - Gold prices were
slightly lower on Thursday, trading in a tight range as the U.S.
House of Representatives passed its version of sweeping tax cuts
and investors weighed possible changes in fiscal policy against
the impact of an expected rise in U.S. interest rates.
    The House passed a bill to cut federal tax rates on
corporations, small businesses and individuals. The U.S. Senate
has yet to vote on its version the bill.             
    "Taxes will determine the type of country we have and it has
an effect on the dollar, which will in turn have an effect on
gold," said John Lawrence, senior metals trader for Heraeus
Precious Metals in New York.
    Spot gold        was down 0.1 percent at $1,277.80 an ounce
by 2:09 p.m. EST (1909 GMT). On Wednesday, it touched a 3-1/2
week high of $1,289.09. 
    U.S. gold futures         for December delivery settled up
50 cents, or 0.04 percent, at $1,278.20 per ounce. 
    So far in November, gold has traded in a tight range
spanning about $24.
    ICBC Standard Bank precious metals strategist Tom Kendall
said the reason for rangebound trade was pressure from the
prospect of a rise in U.S. interest rates dueling with support
from uncertainty about U.S. fiscal policy.
    "The two are kind of pushing and pulling on global yields
and on the gold price," he said.
    The dollar rose slightly.        A stronger U.S. dollar
       makes gold more expensive to buyers using other
currencies. Higher interest rates increase the opportunity cost
of holding non-yielding gold.
    Traders see a 96.7 percent chance of the U.S Federal Reserve
raising rates at its Dec. 13 meeting, CME Group's FedWatch
showed. It would be the Fed's third rate increase this year.
    On Wednesday, the U.S. government said underlying consumer
prices increased in October. This strengthened the view that the
Fed no longer needed to worry about a recent disinflationary
    Also on Wednesday, veteran Fed policymaker Eric Rosengren
said falling unemployment and sustained growth meant the economy
had accelerated beyond a sustainable level, so the Fed should
continue raising rates.               
    In physical demand, a note by BMI Research said China's gold
production growth is expected to slow over the years to 2026
because of depleting reserves and rising production costs.
    In other precious metals, palladium        broke a
five-session losing streak, rising 0.4 percent at $987.50 an
ounce after touching a two-week low on Wednesday. 
    Silver        up 0.4 percent at $17.06 an ounce and platinum
       up 0.1 percent at $932 an ounce.

 (Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by David Gregorio and David Goodman)
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