February 21, 2018 / 4:54 AM / 8 months ago

PRECIOUS-Gold hits 1-week low on strong dollar; Fed minutes awaited

    * Spot gold down for fourth straight session
    * Spot gold may drop to $1,316/oz - Technicals
    * Minutes of Fed's Jan meeting due at 1900 GMT
    * Dollar continues to recover, hits one-week high

 (Updates prices)
    By Eileen Soreng
    Feb 21 (Reuters) - Gold prices hit their lowest in a week on
Wednesday as the dollar steadied after a recovery from last
week's three-year low, while investors awaited the minutes of
the U.S. Federal Reserve's last policy meeting for clues on the
pace of interest rate hikes this year.
    Spot gold        was down 0.2 percent at $1,326.24 an ounce
by 0805 GMT, slipping for a fourth straight session. Earlier in
the day, prices touched the lowest since Feb. 14 at $1,325.20 an
ounce. 
    U.S. gold futures         dipped 0.2 percent to $1,328.3 per
ounce.
    The dollar index       , which measures the greenback
against a basket of currencies, was up 0.2 percent at 89.879,
after hitting a one-week high of 89.937. It hit a three-year low
of 88.253 on Feb. 16.        
    "Continued dollar strength and higher treasury yields should
continue to see the yellow metal under pressure over the
near-term," said MKS PAMP Group trader Sam Laughlin.
    "The return of China will be closely watched for any renewed
physical interest in Asia to stem the weakness."
    Treasury yields rose overnight with the benchmark 10-year
yield             crawling back to near a four-year peak as
investors made room for this week's $258 billion deluge of new
government debt.      
    Treasury yields have risen in the wake of increased
government borrowing. The U.S. Treasury Department has issued
more debt in anticipation of a higher deficit from last year's
major tax overhaul and a budget deal that will increase federal
spending over the next two years.
    Higher yields on bonds make gold a less attractive
investment because it pays no interest. 
    Investors are looking forward to the minutes of the Fed's
Jan. 30-31 policy meeting for any signs of a hawkish tone.
    "A quicker and steeper slope of interest rate normalisation
offers the most prominent near-term threat to gold prices as
this outcome will send the U.S. dollar surging," said Stephen
Innes, APAC trading head at OANDA.
    Spot gold may drop to $1,316 per ounce as it has broken a
support at $1,335, according to Reuters technical analyst Wang
Tao.         
    "Interest around $1,325 will be the key for price direction
in the coming days, weeks, as a sustained move through this
level should extend toward $1,303-$1,310," Laughlin said.
    Meanwhile, holdings at the SPDR Gold Trust      , the
world's largest gold-backed exchange-traded fund, rose 0.39
percent to 827.79 tonnes on Tuesday from 824.54 tonnes on
Friday.             
    Among other precious metals, silver        slipped 0.4
percent to $16.40 an ounce, palladium        declined 0.9
percent to $1,024.80, and platinum        dipped 0.5 percent to
$994.90.

 (Reporting by Eileen Soreng in Bengaluru,  Editing by
Subhranshu Sahu and Sherry Jacob-Phillips)
  
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