December 7, 2017 / 4:33 AM / 10 days ago

PRECIOUS-Gold slides to 4-month low as dollar edges up

    * Spot gold poised to break support at $1,262/oz -
technicals
    * Growing interest in crypto-currencies seen hurting gold

 (Recasts, adds comment, updates prices)
    By Apeksha Nair
    Dec 7 (Reuters) - Gold prices dropped to their lowest level
in four months on Thursday as the dollar rose underpinned by
optimism surrounding tax reform in the United States.
    Spot gold        fell 0.5 percent to $1,257.70 an ounce by
0707 GMT, after marking its lowest since Aug. 8 at $1,255.80.
    U.S. gold futures         were also down 0.5 percent at
$1,259.90.
    The dollar on Thursday inched up against its peers, as
optimism over U.S. lawmakers making progress on tax legislation
continued to grow.                     
    Hopes that U.S. tax reforms would boost economic growth have
dented demand for safe-haven assets such as gold.        
    "Gold is testing critical long-term support at $1,260 in
Asian trading," said Jeffrey Halley, senior market analyst at
OANDA.
    "A break of this level opens up a potential 50-dollar move
to $1,200 as gold suffers from investor flight to crypto
currencies and the prospect of an FOMC rate hike next week with
more to come in 2018."
    Crypto-currency Bitcoin surged past $14,000 on Thursday to
post yet another record high.
    INTL FCStone analyst Edward Meir said gold could move
slightly lower heading into next week's Federal Reserve meeting
as investors would be jittery about the Fed's policy wording
going forward.
    Markets are widely anticipating an interest rate hike by the
U.S. central bank next week and are waiting on the outlook for
further rate hikes in 2018.         
    Gold is highly-sensitive to rising interest rates, as these
tend to boost the dollar, in which the metal is priced.
    "Gold will continue to be under pressure in view of rate
hikes, dollar gains and strong U.S. data," said Argonaut
Securities analyst Helen Lau.    
    Spot gold is poised to break support at $1,262 per ounce,
and fall to the next support level at $1,250, according to
Reuters technicals analyst Wang Tao.             
    "Gold traders will face a nervous end to the week as gold
fails to rally even as the U.S. yield curve continues to flatten
and ahead of crucial payroll data tomorrow evening," Halley
said. 
    Meanwhile, global holdings in gold-backed exchange-traded
funds (ETF) rose by 9.1 tonnes to 2,357 tonnes in November, with
the net inflows coming entirely from Europe as the U.S. dollar
fell, the World Gold Council said on Wednesday.             
    In other precious metals, silver        fell 0.5 percent to
$15.88 an ounce after earlier slipping to its lowest since
mid-July at $15.82. 
    Platinum        was 0.7 percent lower at $895.74 an ounce,
after earlier having hit its lowest since July 11.
    Palladium        was up 0.1 percent to $994.50 an ounce.

 (Reporting by Apeksha Nair in Bengaluru; Editing by Joseph
Radford and Vyas Mohan)
  

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