February 8, 2018 / 4:01 AM / 2 years ago

PRECIOUS-Gold hits 4-wk low on firmer dollar amid U.S. rate hike views

    * Spot gold expected to fall to $1,301/oz - Technicals
    * SPDR Gold holdings fall for second straight session
    * Palladium hits 12-week low

 (Adds comment, updates with latest prices)
    By Nithin ThomasPrasad
    Feb 8 (Reuters) - Gold prices dropped for a third straight
session on Thursday and  hit a fresh four-week low, as investors
liquidated their long positions on a firmer dollar, while
expectations of more U.S. rate hikes this year also weighed on
the market.
    Spot gold        was down 0.4 percent at $1,312.41 per ounce
as of 0755 GMT, after hitting its lowest since Jan. 10 at
$1,309.51 earlier in the session.
    U.S. gold futures         for April delivery were nearly
flat at $1,314.50 per ounce.
    The dollar rose on Wednesday, marking its biggest one-day
gain in more than three months against a basket of currencies
      . It was steady at 90.269 on Thursday.
    "There was consistent selling on Comex... And offers above
the $1,320 cash level were enough to prevent an advance," said
MKS PAMP Group trader Alex Thorndike.
    "Spot gold slowly began to work its way lower with ongoing
liquidation seen from managed money and leveraged clients -
those who were still buying aggressively above $1,340."
    Asian shares flirted with six-week lows on Thursday, while 
U.S. stocks finished lower on Wednesday, losing ground late in
the session as a jump in Treasury yields kept investor
nervousness high.            
    The U.S. Federal Reserve will stick to its plan for "steady,
gradual" interest-rate increases, San Francisco Federal Reserve
Bank President John Williams said on Wednesday despite market
gyrations and strong data on U.S. wage growth that has bond
traders pricing in faster rising inflation.             
    Hikes in interest rates lead to higher bond yields and
dampen the demand for non-yielding gold. The yellow metal is
also used as a hedge against inflation. 
    "The shifting Fed narrative that is gathering hawkish
following could be the most significant thorn in the gold bulls
side," said Stephen Innes, head of trading APAC at OANDA.
    Spot gold is expected to fall more to $1,301 as it has
pierced below a support at $1,316 per ounce, according to
Reuters technical analyst Wang Tao.         
    Holdings at SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund (ETF), dropped 0.29 percent to
826.90 tonnes on Wednesday from 829.27 tonnes on Tuesday.
    Holdings fell for a second straight session after they
marked their worst one-day drop since December 2016 on Tuesday.
    "The heavy falls in equities appear to have impacted ETF
investors," ANZ analysts said in a note.
    Among other precious metals, silver        was little
changed at $16.37 per ounce after touching its lowest since Dec.
22 at $16.22 earlier in the session.
    Platinum        declined 0.2 percent to $977.50 per ounce,
after touching its lowest since Jan. 11 on Wednesday.
    Palladium        fell 0.3 percent to $981.55 per ounce.
Earlier in the session, it hit $977.22, its lowest since Nov.

 (Reporting by Nithin Prasad and Nallur Sethuraman in Bengaluru,
Editing by Richard Pullin and Sherry Jacob-Phillips)
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