January 17, 2018 / 11:48 AM / in a month

PRECIOUS-Gold flat, holds near 4-month highs as dollar slips

    * Dollar index falls during mid-day trade
    * Gold up 8 pct since mid-December
    * Bets on higher prices rise at record rate

 (New throughout, updates prices, market activity and comments;
adds second byline and NEW YORK dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, Jan 17 (Reuters) - Gold prices hovered near
four-month highs on Wednesday as the U.S. dollar slipped against
a basket of currencies.  
    In see-saw trading, the dollar had risen early against the
euro as the single currency backed away from a three-year high.
But the greenback later slipped.                     
    Spot gold        was flat, last up 0.1 percent at $1,339.44
an ounce by 1:58 p.m. EST (1858 GMT). It remained close to
Monday's peak of $1,344.44, its highest since Sept. 8.
    U.S. gold futures         for February delivery settled up
$2.10, or 0.2 percent, at $1,339.20 per ounce. 
    "The euro is driving the dollar, which is then driving the
gold now," said Michael Matousek, head trader at U.S. Global
Investors in San Antonio.
    The price of gold has risen by 8 percent since mid-December,
lifted as the dollar weakened to a three-year low against a
basket of major currencies.        
    "For the moment it looks like gold appears intent on
challenging the 2017 highs around $1,357," said Daniel Ghali,
commodities strategist at TD Securities in Toronto.
    Gold prices could move higher if U.S. Republicans and
Democrats fail to pass a spending bill by Friday to avoid a
possible government shutdown, said Mitsubishi analyst Jonathan
Butler. The White House said it would support a short-term bill.
                         
    Longer-term, gold will be supported by risk that global
share prices could fall from record highs and strong growth
around the world could stoke inflation.            
    "Concerns regarding (share price) overvaluations and the
possibility of rising inflation have reignited interest in
gold," Standard Chartered analysts said in a note.
    Funds' bets on higher gold prices have surged, with their
net long positions rising to almost 200,000 contracts from fewer
than 80,000 in mid-December.              
    "The past three weeks have seen the fastest rise in
speculative positioning in gold on record," Standard Chartered
analysts said.
    But the net long was still only 36 percent of total open
positions and could rise further, which would help to drive
prices higher, they added.
    On technicals, resistance was at $1,350, Matousek added.
    "We’ve had this nice long run since the middle of December
that was orderly. Most people will lighten up, up there, then
buy back," he said.
    In other precious metals, silver        dipped 0.1 percent
at $17.17 an ounce while platinum        rose 0.7 percent at
$1,005.60 after touching its highest since Sept. 8 at $1,006.60.
    Palladium        rose 2.1 percent at $1,116.47 an ounce,
close to the $1,138 record high hit on Monday.             

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Gregorio and David Goodman)
  
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