May 1, 2018 / 10:06 AM / 8 months ago

PRECIOUS-Gold hits four-month low as dollar climbs before Fed meeting

    * Dollar hits 3-1/2-month peak ahead of Fed
    * Platinum slides to lowest since mid-December
    * GRAPHIC-2018 asset returns:

 (Recasts; updates headline, prices; adds comment, byline, NEW
YORK to dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, May 1 (Reuters) - Gold slid to a four-month
low on Tuesday as the dollar strengthened ahead of a U.S.
Federal Reserve policy meeting that is being watched for clues
on the future pace of interest rate hikes.
    Bullion also looks vulnerable after breaking through chart
support in the $1,320/1,317 area, its 100-day moving average and
a key retracement of its January to March decline, technical
analysts said. 
    Spot gold        was down 0.7 percent at $1,305.72 by 1:37
p.m. EDT (1737 GMT), off an earlier low of $1,301.51, its
weakest since Dec. 29. U.S. gold futures         for June
delivery settled down $12.40, or 0.9 percent, at $1,306.80 per
    The greenback hit a 3-1/2-month high versus the euro ahead
of the Fed meeting starting on Tuesday and moved into positive
territory for the year against a basket of currencies.        
    "Gold is down, since the dollar is up ahead of the Fed
meeting," said Josh Graves, senior market strategist at RJO
Futures. "You've also got four (possible) rate hikes this year -
bullish for the dollar, bearish for gold."
    While the U.S. central bank is widely expected to stand pat
on policy for now, market participants will be closely watching
the two-day meet for hints of an interest rate hike in June.
    Rising interest rates typically weigh on gold, as they
increase the opportunity cost of holding non-yielding assets
such as bullion, while boosting the dollar, in which it is
priced. Ultra-low rates were a key factor driving gold to record
highs in the wake of the global financial crisis.
    Global political tensions about the Korean Peninsula
continued to fade, pressuring gold prices, Graves said.
Investors see the metal as a store of value during times of
political and economic duress. 
    Gold now looks vulnerable to further losses after breaking
through key support levels, according to technical analysts, who
study past price patterns to predict the direction of trade. 
    "MACD (moving average convergence-divergence) and momentum
indicators highlight downside risk and I remain bearish on gold,
targeting 1,304.30, the 200-day moving average," ScotiaMocatta
said in a note. 
    Silver        shed 1.2 percent to $16.11 an ounce, earlier
hitting $16.04, a more than four-month low. Palladium       
declined 2.3 percent to $942.60 an ounce, earlier touching
$939.47, a three-week low. 
    Platinum        dropped 1.2 percent to $892.10 an ounce. The
white metal used in autocatalysts and jewelry dipped earlier in
the session to $888.50, its lowest since Dec. 18. It was the
biggest faller among major precious metals last month, sliding
2.7 percent in a third straight monthly loss. 

 (Additional reporting by Eileen Soreng in Bengaluru; editing by
Mark Potter and Susan Thomas)
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