July 2, 2018 / 4:51 AM / 4 months ago

PRECIOUS-Gold prices edge lower as dollar firms

    * Dollar hits fresh 6-week high vs yen
    * Specs cut net long positions in gold, silver in week to
June 26
    * SPDR holdings fell 0.18 on Friday

 (Adds details, comments; updates prices)
    By Karen Rodrigues
    BENGALURU, July 2 (Reuters) - Gold prices edged lower on
Monday as the dollar firmed after last week's U.S. inflation
data supported the Federal Reserve's outlook for future interest
rate increases.
    Spot gold        was 0.1 percent lower at $1,251.17 an ounce
as of 0352 GMT. 
    U.S. gold futures         for August delivery were down 0.2
percent at $1,252.50 an ounce.
    The dollar strengthened against a basket of currencies
       and hit a fresh six-week high of 111.06 yen       ,
supported by the relative strength of the U.S. economy and on
prospects of further rate hikes from the Federal Reserve.       
    "Monetary policy re-normalization induces the strength in
the dollar and with that weakening gold prices," said Mark To,
head of research at Hong Kong's Wing Fung Financial Group.
    The risk-aversion demand is not as significant as the impact
of expected interest rate increases, To said.
    U.S. consumer prices accelerated in the year to May, with a
measure of underlying inflation hitting the Federal Reserve's 2
percent target for the first time in six years, data showed on
Friday. 
    The rise in price pressures will probably not shift the Fed
from its stated path of gradual interest rate increases as
policymakers have indicated they would not be too concerned with
inflation overshooting its target.             
    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, the U.S. Mint sold 19,500 ounces of American
Eagle gold coins in June, down 18.8 percent from the previous
month, according to the latest data.             
    Speculators cut their net long positions in COMEX gold and
silver contracts in the week to June 26, U.S. Commodity Futures
Trading Commission (CFTC) data showed on Friday.        
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.18 percent to 819.04
tonnes on Friday from 820.51 tonnes on Thursday.          
    Among other precious metals, spot silver        fell 0.3
percent at $16.04 an ounce. 
    Palladium        was 0.1 percent higher at $953.50 an ounce,
while platinum        was down 0.3 percent at $845.25 per ounce.

 (Reporting by Karen Rodrigues in Bengaluru
Editing by Joseph Radford and Amrutha Gayathri)
  
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