May 16, 2018 / 3:55 AM / 10 days ago

PRECIOUS-Gold prices recover on short-covering

    * Dollar index hovers near 5-month high
    * Benchmark U.S. Treasury yield hovers around 3 percent 
    * Spot gold may bounce to resistance at $1,302/oz-
technicals

 (Updates prices)
    By Apeksha Nair
    BENGALURU, May 16 (Reuters) - Gold prices recovered some
lost ground on Wednesday on short-covering after prices fell to
the lowest level this year in the previous session on surging
U.S. bond yields and a stronger dollar. 
    Spot gold        rose 0.3 percent to $1,294.30 per ounce at
0639 GMT, after shedding 1.7 percent and marking the lowest this
year at $1,288.31 in the previous session.
    This was also the lowest price level for the yellow metal
since Dec. 28.
    U.S. gold futures         for June delivery were up 0.3
percent at $1,293.60 per ounce.
    "Rising U.S. bond yields and a stronger dollar were factors
behind gold's decline below the $1,300 level. The slight pick up
suggests that there might have been some opportunistic buying on
the part of investors," said John Sharma, an economist with
National Australia Bank.
    A stronger dollar makes greenback-denominated gold more
expensive for holders of other currencies, while rising U.S.
yields tend to weigh on bullion's non-yielding appeal.
    The dollar on Wednesday hovered near a five-month high
against a group of major currencies, boosted by a surge in the
benchmark 10-year Treasury yield after strong U.S. retail data
on Tuesday.                          
    Meanwhile, Asian shares were under pressure after North
Korea cancelled high-level talks with Seoul, denouncing military
exercises between South Korea and the United States and throwing
into question next month's unprecedented summit between Kim Jong
Un and U.S. President Donald Trump.                         
    While global political tensions continued to provide
safe-haven support to the metal, investors said the main price
drivers would likely remain a stronger dollar and rising U.S.
interest rates.
    "There are lot of geopolitical risks but people are just
used to it. Therefore it has not become a big driver for gold,"
said Helen Lau, analyst at Argonaut Securities.
    Higher interest rates in the United States amid a rising
dollar will continue to add downward pressure on gold, Lau said.
    Spot gold may bounce to a resistance at $1,302 per ounce, 
before falling again, Reuters technical analyst Wang Tao said.
            
    In other precious metals, silver        was up 0.4 percent
at $16.30 per ounce after falling about 1.6 percent on Tuesday
in its biggest one-day percentage decline since April 23. 
    Platinum        rose 0.4 percent to $897 an ounce, while
palladium        eased 0.1 percent to $981.72 an ounce after
recording the biggest single-day percentage loss in two weeks at
1.3 percent in the previous session.

 (Reporting by Apeksha Nair and Eileen Soreng in Bengaluru;
Editing by Sunil Nair)
  
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