May 17, 2018 / 3:37 AM / 6 months ago

PRECIOUS-Gold prices ease as dollar hovers near 2018 peak

    * U.S. 10-year Treasury yield touches fresh 7-year high
    * Uncertainty around N.Korea-U.S. summit limits downside for
gold
    * Platinum hits 5-month low 

 (Recasts, updates prices)
    By Apeksha Nair
    BENGALURU, May 17 (Reuters) - Gold prices erased early gains
on Thursday and edged closer to a five-month low, hit in the
previous session, as the dollar pared losses against major
rivals and traded within sight of its 2018-peak.
    Spot gold        fell 0.1 percent to $1,288.65 per ounce by
0723 GMT, after marking its lowest since Dec. 27 on Wednesday at
$1,286.20.
    U.S. gold futures         for June delivery were nearly 0.3
percent lower at $1,288 per ounce.
    The dollar index        trimmed losses and traded within
sight of its 2018-peak hit overnight, while the euro hovered
near a five-month low on concerns that political developments in
Italy could cause wider disruptions in the common currency bloc.
                   
    Also weighing on gold were surging U.S. bond yields, with
the yield on the benchmark 10-year note hitting its highest
level since 2011 on signs the economy was strengthening.      
    "Further gold weakness cannot be fully discounted, as the
stronger U.S. Treasury yields seen could garner more dollar
strength into the month ahead," OCBC analyst Barnabas Gan said.
    A stronger dollar makes greenback-denominated gold more
expensive for holders of other currencies, while higher U.S.
bond yields weigh on the appeal of non-yielding bullion.
    Meanwhile, political uncertainty arising out of North Korea
after Pyongyang threatened to pull out of a meeting with the
United States was likely limiting downside for gold, investors
said.              
    "The tug-of-war between risk appetite and dollar-strength
will be key in determining how gold may move. We have already
seen some potential safe-haven buying ... given the potential
breakdown in U.S.-Pyongyang talks, despite a stronger
greenback," Gan said.
    Gold prices can gain during times of uncertainty as the
metal is seen as a safe place to park assets.
    In other precious metals, silver        was unchanged at
$16.35 an ounce, having touched the lowest in two weeks at
$16.17 in the previous session.
    Platinum        was up 0.1 percent at $888.30 per ounce,
after earlier hitting its lowest in five months at $883.
    Palladium        fell 0.2 percent to $981.20 per ounce.

 (Reporting by Apeksha Nair in Bengaluru
Editing by Joseph Radford and Subhranshu Sahu)
  
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