May 17, 2018 / 1:58 PM / 5 months ago

PRECIOUS-Gold flat after hitting 2018 low as dollar, Treasuries firm

    * U.S. 10-year Treasury yield touches seven-year high
    * Platinum slips to lowest since mid December
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Recasts; updates prices, headline; adds comment, second
byline, NEW YORK to dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, May 17 (Reuters) - Gold was flat after
sliding to a fresh 2018 low on Thursday as another rise in U.S.
bond yields and concerns over political risk in Italy held the
dollar index near its 2018 peak.
    The precious metal has fallen more than 2 percent this week
on gains in the U.S. currency and a rise in U.S. 10-year
Treasury yields to seven-year highs. Higher yields increase the
opportunity cost of holding non-yielding assets such as bullion.
            
    But gold got some support from geopolitical strife in North
Korea.
    Spot gold        was flat at $1,290.51 per ounce by 1:37
p.m. EDT (1737 GMT), off an earlier 4-1/2-month low of
$1,285.41. U.S. gold futures        for June delivery settled
down $2.10, or 0.2 percent, at $1,289.40 per ounce. 
    The dollar has climbed nearly 4 percent this quarter on
expectations the U.S. Federal Reserve will lift U.S. interest
rates further this year to curb inflation, at a time when other
central banks are still keeping monetary policy loose.       
    "The dollar and the interest rates are what's really driving
gold," said Chris Gaffney, president of world markets at
Everbank. 
    "Gold has further down to go, because the dollar has room to
go higher."
    The euro remains under pressure, hovering near a five-month
low on concerns that political developments in Italy could cause
wider disruption in the common currency bloc.             
    Political uncertainty arising out of North Korea after
Pyongyang threatened to pull out of a meeting with the United
States was likely to limit downside for gold, analysts said.
             
    Market watchers, unsure if the U.S. Federal Reserve will be
able to aggressively hike rates and concerned about political
uncertainty, lent support to gold prices, said Ryan McKay,
commodity strategist at TD Securities. 
    But gold "still remains vulnerable to the prevailing dollar
and rate headwinds," INTL FCStone said in a note.
    From a technical perspective, gold prices were looking
vulnerable to further losses after breaking below key chart
levels this week, according to analysts who study past price
moves to determine the future direction of trade.
    "Gold has eroded key support, namely the 200-day moving
average, the $1,302.74 March low and the 50 percent retracement
(of the December-to-January rally)," Commerzbank said in a note
on technicals. "We have been forced to neutralize our outlook as
the market is now on the defensive."
    Meanwhile, silver        increased 0.6 percent to $16.44 an
ounce.
    Platinum        gained 0.4 percent to $890.80 per ounce, off
an earlier five-month low of $879, while palladium       
declined 0.6 percent to $977.47.

 (Additional reporting by Apeksha Nair in Bengaluru
Editing by Edmund Blair and Bernadette Baum)
  
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