January 15, 2018 / 3:25 AM / 2 years ago

PRECIOUS-Gold hits over 4-mth high as dollar index slumps to 3-yr lows

    * Spot gold may rise to $1,357.54/oz - technicals
    * Speculators raise net longs in COMEX gold in the week to
Jan. 9.
    * Palladium hits new record highs

 (Updates prices)
    By Sethuraman N R
    Jan 15 (Reuters) - Gold prices touched their highest in more
than four months on Monday, buoyed by a weaker U.S. dollar,
which slumped to three-year lows against a basket of currencies.
    Spot gold        was up 0.3 percent at $1,342.50 an ounce by
0718 GMT after touching its strongest since Sept. 8 at
$1,344.44.
    Spot gold rose for a fifth straight week last week, gaining
1.4 percent. 
    U.S. gold futures         were up 0.5 percent at $1,341.90
an ounce.
    "While the weaker dollar remained gold's primary driver,
investors are keeping an eye on the simmering geopolitical hot
spot in the Middle East," said Stephen Innes, APAC head of
trading at OANDA.
    "Iran remains among the most poignant of geopolitical risks
this year following President Trump's decision not to ratify
Iran's compliance on the nuclear deal ... Gold investors are
likely under-positioned for a significant escalation which could
lead to considerable price increase."
   Iran's president said on Sunday the United States had failed
to undermine a nuclear deal between Tehran and major powers, and
hailed the accord as a "long-lasting victory" for Iran, state
television reported.             
   U.S. President Donald Trump on Friday delivered an ultimatum
to European signatories of the deal to fix the "terrible flaws"
of the agreement with Iran, or the United States would pull out.
    The dollar index dropped 0.2 percent to 90.810. Earlier in
the session, it hit a low of 90.622       , its worst since Jan.
2015. 
    The recent drop in U.S. unemployment could spark a surge in
inflation that, given the Federal Reserve's current policy
framework, could trigger interest-rate hikes that bring on a
recession, Boston Federal Reserve President Eric Rosengren
warned on Friday.             
    Higher rates could dent demand for non-interest-paying gold.
    Adding a touch of bullishness to gold was the data from U.S.
Commodity Futures Trading Commission (CFTC) on Friday, which
showed that hedge funds and money managers raised their net long
positions in COMEX gold and silver contracts in the week to Jan.
9.        
    Spot gold may break a resistance at $1,341 per ounce and
rise to the Sept. 8, 2017 high of $1,357.54, as suggested by a
retracement analysis, according to Reuters technical analyst
Wang Tao.             
    Among other precious metals, palladium        rose 1 percent
to $1,135 on Monday, after hitting a record high of $1,138 early
in the session. 
    The metal has seen a sustained rally from high demand in the
auto industry amid a supply deficit, analysts said.
    Spot silver        rose 0.7 percent to $17.26 an ounce,
after touching a near three-month high at $17.42.
    Platinum        was up 0.3 percent at $996.95, after
touching its highest since Sept. 11 at $1,001.40 on Monday.

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by Sunil
Nair and Biju Dwarakanath)
  
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