January 16, 2018 / 3:46 AM / 8 months ago

PRECIOUS-Gold holds near 4-mth peak, buoyed by weaker dollar

    * Spot gold may test $1,357.54/oz - technicals
    * Palladium slips below Monday's record high
    * Silver off 3-mth top, platinum off 4-mth high

 (Adds comment, updates prices)
    By Sethuraman N R
    Jan 16 (Reuters) - Gold prices edged higher on Tuesday to
hold just below a four-month high touched in the previous
session, supported by a weaker U.S. dollar languishing near
three-year lows.
    Spot gold        was up 0.1 percent at $1,340.98 an ounce by
0650 GMT, after touching its strongest since Sept. 8 at
$1,344.44 on Monday.
    U.S. gold futures         rose 0.4 percent to $1,340.80 an
ounce.
    "Gold seems to be moving higher on account of rising
inflationary expectations and a steep drop in the dollar," said
INTL FCStone analyst Edward Meir.
    "We are not sure if gold could withstand the higher yield
environment going into 2018, especially if the dollar eventually
reverses course. In addition, we don't see the recent spike in
U.S. inflation lasting."
    The dollar index       , which measures the greenback
against a basket of currencies, fell on Monday to its lowest
since December, 2014 at 90.279. It was last down 0.6 percent at
90.417.
    The euro stood near a 3-year peak on rising expectations
that the European Central Bank could pare its monetary stimulus.
           
    ECB rate-setter Ardo Hansson on Monday said the central bank
could end its bond purchase scheme in one go after September if
the economy and inflation develop as expected.             
    The dollar has weakened as markets grow increasingly
confident that a global recovery would outpace U.S. growth and
prompt other major central banks, led by the ECB, to unwind
their easy money strategy faster than has been expected.       
    "We are likely to see further short squeezes over the
near-term as the metal (gold) edges toward $1,350 and above this
the September 2017 high around $1,357 will be the ultimate
target for bulls," MKS PAMP Group trader Sam Laughlin said.
    "Supportive interest around $1,330 should restrict any
further declines. However, should we see a period of weakness,
support broadly around $1,305 - $1,310 will act as a pivot point
for the metal and will need to hold to continue the recent
upward momentum."
    Spot gold may revisit its Sept. 8, 2017 high of $1,357.54
per ounce, as suggested by a retracement analysis, Reuters
technical analyst Wang Tao said.             
    Palladium       , which marked a record high of $1,138 an
ounce on Monday, was last down 0.3 percent at $1,123.10 on
Tuesday. The metal has seen a sustained rally from high demand
in the auto industry amid a supply deficit, analysts said.
    Spot silver        was down 0.6 percent to $17.24 an ounce.
It hit a three-month high of $17.42 on Monday.
    Platinum        dropped 0.3 percent to $993.20, after
touching its strongest since Sept. 11 at $1,001.40 on Monday.

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by
Richard Pullin and Sunil Nair)
  
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