September 27, 2017 / 4:45 AM / in 10 months

PRECIOUS-Gold edges down as dollar gains on Fed rate hike view

    * Dollar hovers near one-month highs
    * Markets wait for unveiling of U.S. tax plan

 (Recasts, adds comment, updates prices)
    By Nithin ThomasPrasad
    Sept 27 (Reuters) - Gold inched lower on Wednesday, weighed
down by a stronger dollar amid prospects for a December interest
rate hike in the United States and ahead of the unveiling of a
tax plan by Donald Trump's administration.
   Spot gold        had declined 0.1 percent to $1,291.81 per
ounce by 0729 GMT. 
    In the previous session, prices fell 1.3 percent in their
biggest loss in over two weeks following comments by U.S.
Federal Reserve Chair Janet Yellen that the central bank needed
to continue gradual rate hikes despite broad uncertainty about
the path of inflation             
    U.S. gold futures         for December delivery fell 0.5
percent to $1,294.90.
    Shares rose on Wednesday as investors hoped for progress on
major tax reform in the United States, while the dollar hovered
near one-month highs on growing expectations of a U.S. interest
rate increase in December.                                
    Gold is highly-sensitive to rising U.S. interest rates, as
these increase the opportunity cost of holding non-yielding
bullion, while boosting the greenback.
    A strong U.S. inflation reading could raise expectations for
future rate increases.
    "As we head towards the end of the year and the expectations
for a rate hike in the U.S. continue to build, like last year,
this is likely to weigh on gold prices," said James Butterfill,
Head of Research & Investment Strategy at ETF Securities (UK)
    Prices of the yellow metal have been "vulnerable to a
short-term correction," following the recent strong rally, he
    However, lingering tensions in the geopolitical arena have
capped further losses, analysts said.
    "Gold lost what it gained on North Korea (tensions) since
Friday after Yellen's comments, said Yuichi Ikemizu, Tokyo
branch manager at ICBC Standard Bank.
   "But I think the (North Korea) situation is more serious than
the Fed's policies. So, gold is supported around here and I
expect prices to go back up to $1,300."  
    President Donald Trump warned North Korea on Tuesday that
any U.S. military option would be "devastating" for Pyongyang,
but said the use of force was not Washington's first option to
deal with the country's weapons programme.              
    Geopolitical risks tend to boost demand for safe-haven
assets such as gold.
    Among other precious metals, silver        rose 0.3 percent
to $16.81 per ounce. In the previous session, prices dropped 2.4
percent, their biggest fall since mid-August 
    Platinum        eased 0.1 percent to $920.99 per ounce,
after slipping about 2 percent in the previous session, its
biggest fall since early July.
    Palladium        declined 0.2 percent to $911.90 per ounce.

 (Reporting by Nithin Prasad and Arpan Varghese in Bengaluru;
Editing by Vyas Mohan and Joseph Radford)
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