September 29, 2017 / 5:16 AM / 10 months ago

PRECIOUS-Gold little changed, on track for worst month this year

    * Palladium gains 11 pct on quarter, up 38 pct in year so
    * Silver set for 4 percent decline in Sept.
    * Platinum set for 7.1 percent decline in Sept.

 (Rewrites paragraph 1, updates prices)
    By Nithin ThomasPrasad
    Sept 29 (Reuters) - Gold traded little changed on Friday
amid pressure from a stronger dollar, but was headed for its
biggest monthly fall this year amid rising prospects of a U.S.
rate hike in December.
    Spot gold        was nearly unchanged at $1,286.96 per ounce
as of 0720 GMT, on track to register a 2.5 percent decline in
September, its largest monthly fall so far in 2017 and the
biggest since November 2016. 
    However, it was set to end the quarter around 3.7 percent
    U.S. gold futures         rose 0.1 percent to $1,289.70 per
    Gold is mostly being influenced by the dollar's movements in
an otherwise quiet session, said Yuichi Ikemizu at ICBC Standard
Bank in Tokyo.
     The U.S. dollar        inched higher and was on track for
its biggest weekly gain this year as investors pondered the
Trump administration's tax plan and the outlook for U.S. Federal
Reserve policy.                  
    "(Gold) will likely continue to struggle in the short term
against a backdrop of higher interest rates, particularly in the
U.S. and possibly in the U.K. and Europe," said INTL FCStone
analyst Edward Meir. 
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion, while boosting the greenback.     
    Meanwhile, palladium        gained 0.7 percent to $935.70
per ounce. It was up 11 percent for the quarter and 38 percent
so far in 2017. 
    Platinum        rose 0.5 percent to $924 per ounce. The
metal is set for a 7.1 percent drop for September, its worst
performing month since March. 
    Palladium traded at a premium to platinum for a third
straight day after prices for the two metals hit parity for the
first time since 2001 on Wednesday.             
    "Palladium is short-supplied and also there's very good
demand from auto sectors. As long as this situation continues, 
we'll see a premium in palladium ," said Ikemizu.
    "If it goes on for a long time, car makers will have to
switch from palladium to platinum, which was unthinkable in the
past ... (However,) This current reversal probably won't be long
enough for car makers to decide on substitution." 
    Both metals are primarily consumed by automakers for
catalytic converters, but platinum is more heavily used in
diesel vehicles that have fallen out of favour.   
    Meanwhile, silver        edged 0.1 percent higher to $16.84
per ounce and was on track for a 4 percent loss on month, but
was set to end the quarter 1.7 percent higher. 

 (Reporting by Nithin Prasad and Arpan Varghese in Bengaluru;
Editing by Christian Schmollinger and Vyas Mohan)
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