October 13, 2017 / 3:52 AM / a year ago

PRECIOUS-Gold extends rally ahead of U.S. data; eyes 1st weekly gain in five

    * Spot may retest resistance zone of $1,297-$1,299/oz -
    * U.S. September CPI data due at 1230 GMT
    * Spot gold up 1.7 pct for the week

 (Updates prices)
    By Apeksha Nair
    Oct 13 (Reuters) - Gold rose for a sixth day on Friday,
buoyed by a weaker dollar, with investors waiting for key U.S.
inflation data for clues on the outlook for potential hikes in
U.S. interest rates.
    Spot gold        was up 0.3 percent at $1,297.06 an ounce,
as of 0657 GMT, after earlier marking its highest since Sept.
    The metal was on track to post its first weekly gain in
    U.S. gold futures         for December delivery gained 0.2
percent at $1,299.30 per ounce.
    "We remain somewhat cautious on gold here, as we think the
complex will have some difficulty moving higher as we approach
both the ECB meeting and the Fed rate increase slated for
year-end," INTL FCStone analyst Edward Meir said in a note.
    "Having said that, with the political situation in
Washington looking messy and potentially bearish for the dollar
... the precious metal could see an element of support
materialising as well."
    The dollar slipped on Friday, on track for weekly losses as
investors awaited the U.S. inflation data to gauge the
likelihood that the Federal Reserve will stick to its plan to
raise interest rates again this year.       
    The greenback hit an over two-week low against a basket of
currencies        in the previous session after minutes from the
Fed's September meeting showed the central bank was concerned
over low inflation.             
    Hurdles in U.S. tax and healthcare reforms had also recently
pressured the currency.                          
    However, data on Thursday showed U.S. producer prices rose
in September, suggesting signs of underlying strength in both
wholesale inflation and the labour market, potentially leaving
the Fed on track to raise interest rates again in December.
    Markets were pricing in a nearly 90 percent chance of a
December rate hike, according to CME Group's FedWatch tool.
    Gold is highly sensitive to rising rates, as these tend to
boost the dollar, putting pressure on the greenback-denominated
    Elsewhere, European Central Bank Chief Mario Draghi defended
a pledge to keep interest rates at rock bottom on Thursday,
while Bank of Japan's Haruhiko Kuroda stressed the central
bank's resolve to maintain its ultra-loose monetary policy.
    "Draghi's phrasing could have provided gold with support as
well, as it showed that not all central banks are moving at the
same speed towards tightening policy and some(like the BoJ) have
no intention at all."     
    Spot gold may retest a resistance zone of $1,297-$1,299 per
ounce, a break above which could lead to a gain to $1,305,
Reuters technicals analyst Wang Tao said.                
    Silver        was up 0.7 percent at $17.28 an ounce, after
marking an over three-week high earlier in the session.
    Platinum        and palladium        climbed 0.6 percent
each to $938.70 and $978.60 an ounce, respectively.

 (Reporting by Apeksha Nair in Bengaluru; Editing by Joseph
Radford and Sherry Jacob-Phillips)
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