January 25, 2018 / 11:10 AM / 3 months ago

PRECIOUS-Gold reverses course, falls from 2016 high as dollar rebounds

    * Dollar reverses after Trump comments
    * Gold drops more than 1 percent

 (New throughout, updates prices and market activity and
comments)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, Jan 25 (Reuters) - Gold dropped more than 1
percent on Thursday, retreating after an early rise as the U.S.
dollar strengthened when President Donald Trump talked up a
stronger greenback.
    The dollar reversed earlier losses and U.S. stocks
relinquished gains after Trump told CNBC in an interview in
Davos, Switzerland that he wants to see a strong dollar.       
                  
    That sent gold tumbling to a session low of $1342.70 per
ounce.
    A day earlier, the dollar fell and gold rose after U.S.
Treasury Secretary Steven Mnuchin said he welcomed a weaker
currency.             
    "The second Trump's comments came out, we saw weakness in
the euro and strength in the dollar that bled over into other
markets," said Phillip Streible, senior commodities strategist
at RJO Futures in Chicago.
    "Gold started to sell off and silver followed. Once that
occurred, it seems like people long on this rally that had built
up a lot of positions at these higher levels were nervous that
they'd give up their gains that they've seen over the last few
weeks."
    Spot gold        was down 0.8 percent at $1,347.39 by 4:21
p.m. EST (2121 GMT). Its session high of $1,366.07 was the
highest since Aug. 3, 2016. On Wednesday it jumped 1.3 percent
in the biggest daily gain since August. 
    Earlier, U.S. gold futures         for February had settled
up $6.60, or 0.5 percent, at $1,362.90 per ounce.
    The euro        was flat, retreating from an early jump to
its highest in three years on a boost from comments by European
Central Bank chief Mario Draghi.                          
             
    "After everybody heard the purveyors of finance, their views
on the dollar and global GDP, there was an intraday reversal,"
said Michael Matousek, head trader at U.S. Global Investors in
San Antonio.
    After reaching its highest since August 2016 this week, gold
was due for a correction, traders said.
    "The explosive move we have seen almost continuously since
Dec. 12 is really quite amazing. For this market to have a
chance of going higher it desperately needs to consolidate,"
Saxo Bank analyst Ole Hansen had said earlier. 
    In other precious metals, silver        dropped 1.5 percent
at $17.30 an ounce after touching $17.70, its highest since
Sept. 15.
    Platinum        was down 0.2 percent at $1,010.50 an ounce
after hitting its highest since February 2017 at $1,027.60.
    Palladium        fell by 1.5 percent at $1,094.35 an ounce.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Gregorio)
  
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