November 13, 2017 / 5:00 AM / a year ago

PRECIOUS-Gold prices trade in range, but U.S. rate hike view weighs

    * Spot gold biased to retest support at $1,263/oz
    * Fed's Harker says expects three rates hikes next year

 (Adds comment, updates prices)
    By Vijaykumar Vedala
    Nov 13 (Reuters) - Gold prices drifted in a narrow range on
Monday, but held near the previous session's low, pressured by a
firmer dollar and expectations of a series of interest rate
hikes by the U.S. Federal Reserve this year and in 2018.
    Spot gold        was nearly unchanged at $1,276.61 per ounce
at 0734 GMT. On Friday, gold dropped 0.7 percent for its biggest
one-day percentage fall since Oct. 26, weighed down by a rise in
U.S. Treasury bond yields.                  
    U.S. gold futures         for December delivery were up 0.2
percent at $1,277.10.
    "The sell-off (on Friday) underlines the sensitivity of gold
to the U.S. yield curve and further emphasizes that the
safe-haven premium in the gold price is mainly non-existent at
the moment," said Jeffrey Halley, a senior market analyst with
    "Gold's fate will not be its own as we enter the home
stretch of 2017."
    The expectation of an interest rate hike by the Fed next
month is keeping gold prices range-bound, said Richard Xu, a
fund manager at China's biggest gold exchange-traded fund, HuaAn
    Philadelphia Fed President Patrick Harker said on Monday
that he expects to back an interest rate hike next month and
expects the central bank in the United States to raise rates
three times next year.             
    "Markets are digesting this news and we don't see much
movement in gold prices in the next one or two months," Xu said.
    Higher interest rates tend to boost the dollar and push bond
yields up, putting pressure on gold prices by increasing the
opportunity cost of holding non-yielding bullion.
    The dollar rose as U.S. yields spiked and as the pound
stumbled on uncertainty surrounding the fate of British Prime
Minister Theresa May's government, although the main investor
focus was still on how and when a planned U.S. tax overhaul
would pan out.                    
    The head of the House of Representatives' tax-writing
committee said on Sunday he would not accept elimination of a
federal deduction for state and local taxes, opposing a proposal
from Senate Republicans that would hike taxes for some middle
class Americans.             
    Spot gold is biased to retest support at $1,263 per ounce, a
break below which could open the way towards the next support at
$1,241, said Reuters technical analyst Wang Tao.             
    "In lieu of major developments, it is difficult to see gold
finding the support necessary for a move back toward $1,300 over
the near-term," MKS PAMP trader Sam Laughlin said in a note.
    In other precious metals, silver        edged up 0.1 percent
to $16.91 per ounce. 
    Platinum        rose 0.3 percent to $928.49 per ounce and
palladium        was up 0.2 percent at $996.25.

 (Reporting by Vijaykumar Vedala and Arpan Varghese in
Bengaluru; Editing by Joseph Radford and Christian Schmollinger)
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