October 2, 2017 / 4:10 AM / a year ago

PRECIOUS-Gold drops to lowest in nearly 7 weeks; stronger dollar, equities drag

    * Spot gold may drop to $1,261-$1,267/oz range - technicals
    * GRAPHIC-Platinum/palladium ratio: tmsnrt.rs/1QjSZAC
    * Specs reduce net longs in gold
    * Silver near 8-week low

 (Updates prices)
    By Apeksha Nair
    Oct 2 (Reuters) - Gold slipped to its lowest in nearly seven
weeks early on Monday as the U.S. dollar rose and equities
gained, while growing expectations for a Federal Reserve
interest rate hike in December also added to pressure.    
    Spot gold        was down 0.4 percent at $1,273.60 an ounce
by 0646 GMT, after earlier touching its lowest since mid-August
at $1,272.35.
    U.S. gold futures         for December delivery shed 0.7
percent to $1,276.50.     
    The metal recorded its biggest monthly decline so far this
year in September, despite netting a quarterly rise of 3 percent
partly due to geopolitical tensions.
    "The dollar is a bit stronger and put gold under pressure
first thing this morning, so we took out Friday's low. China's
out for Golden week, so it's just moving on the back of what the
dollar-yen's doing," said a Hong Kong-based trader.
    "Gold might just keep drifting lower until the Chinese
return. There's nothing really to excite gold at the moment."
    U.S. President Donald Trump on Sunday dismissed the prospect
of talks with North Korea as a waste of time a day after his own
secretary of state said the United States was maintaining open
lines of communication with North Korea.             
    The dollar gained versus the yen and stood tall against the
euro and other major counterparts on Monday and Asian shares
rose as investors kept a close eye on an independence vote in
Spain's Catalonia.                   
    The U.S. currency recorded its best week of the year on
Friday, despite benign inflation data for August, partly lifted
by expectations that the Fed would raise interest rates again in
    Philadelphia Fed President Patrick Harker said on Friday he
still has "pencilled in" a rate hike in December, and three more
hikes next year, in line with most of his colleagues at the
central bank.             
    Higher interest rates tend to boost the dollar and push bond
yields up, weighing on greenback-denominated, non-yielding
    Spot gold may drop into a range of $1,261-$1,267 per ounce,
as it has cleared a support at $1,277, Reuters technicals
analyst Wang Tao said.             
    Speculators reduced their net long positions in COMEX gold
and silver contracts in the week to Sept. 26, U.S. data showed
on Friday.        
    Silver        edged down 0.2 percent to $16.57 an ounce
after earlier in the session marking its lowest since Aug. 9.
    Platinum        and palladium        were little changed at
$910 and $933.75 an ounce, respectively.    
    Platinum continued to trade at a discount to palladium for a
fourth consecutive session.             

 (Reporting by Apeksha Nair in Bengaluru; Editing by Joseph
Radford and Subhranshu Sahu)
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