July 19, 2018 / 6:55 PM / 3 months ago

PRECIOUS-Gold dips to one-year low as U.S. dollar firms

    * Gold briefly turned positive as dollar fell
    * Palladium touches near one-year low
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices; adds comment, byline; NEW YORK to dateline)
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, July 19 (Reuters) - Gold sank to a one-year
low on Thursday as the dollar rose after comments from Federal
Reserve Chairman Jerome Powell that reaffirmed expectations more
U.S. interest rate increases are on the way this year.
    Bullion is highly exposed to U.S. interest rates, as higher
rates raise the opportunity cost of holding non-yielding assets
and boost the dollar. 
    The Fed raised rates in June and policymakers have indicated
they expect two more increases this year. Powell said nothing in
two days of congressional testimony this week to suggest
otherwise.             
    Spot gold        was down 0.3 percent at $1,223.15 per ounce
by 2:15 p.m. EDT (1815 GMT), having earlier touched $1,211.08,
its lowest since July 2017. U.S. gold futures         for August
delivery settled down $3.90, or 0.3 percent, at $1,224 per
ounce.
    Gold prices later turned positive, albeit briefly, as the
dollar declined against a basket of currencies after U.S.
President Donald Trump told CNBC television he is "not thrilled"
about interest rate increases because they strengthened the
dollar, making U.S. exports more expensive overseas.
            
    But the greenback regained some of its losses, barely
changed from the previous session's close. Gold prices rose to
match the previous session's highs before returning to negative
territory.
    "There was technical selling after a fundamentally bullish
news spike," said Dan Hussey, senior market strategist of RJO
Futures.
    Global trade tensions have not driven investors to purchase
gold, traders said. Bullion is generally regarded as a safe and
stable store of value during times of global uncertainty. 
    "If trade tensions hamper global growth, that'll impact
demand," said Chris Gaffney, president of world markets at TIAA
Bank.
    The dollar earlier rose to a one-year high against a basket
of six major currencies       , supported by Powell's bullish
comments.       
    Among other precious metals, silver        dropped 0.7
percent to $15.42 an ounce, after plunging to a one-year low of
$15.13.
    Platinum        lost 0.6 percent at $808.50 per ounce,
earlier dropping to $788, its lowest since December 2008.
    Palladium        fell 3.1 percent to $878 per ounce, having
slipped to its lowest since July 2017 at $859.50.

 (Reporting by Zandi Shabalala in London and Karen Rodrigues in
Bengaluru; editing by Kirsten Donovan and Steve Orlofsky)
  
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