November 27, 2017 / 12:40 PM / 20 days ago

PRECIOUS-Gold rises, hits 6-week high, on lift from weaker dollar

    * U.S. dollar falls to two-month low
    * Fed Chair nominee to appear in Congress this week
    * Technical indicators suggest gold to keep rising

 (New throughout, updates prices, market activity and comments;
adds second byline and NEW YORK dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, Nov 27 (Reuters) - Gold prices rose on
Monday, buoyed by a weaker dollar, as investors looked ahead to
congressional testimony by the nominee to chair the U.S. Federal
Reserve and a meeting between U.S. President Donald Trump and
Senate Republicans on tax reform.
    Spot gold        was up 0.5 percent at $1,294.44 an ounce by
1:36 p.m. EST (1836 GMT), after hitting $1,299.13, its highest
since Oct. 16.
    U.S. gold futures         for December delivery settled up
$7.10, or 0.6 percent, at $1,294.40 per ounce. 
    "We've seen a fairly firm recovery underpinned by a weaker
dollar and some data readings from the U.S. and elsewhere that
called into question the sustainability of growth," said
Mitsubishi analyst Jon Butler.
    Last week, U.S. PMI and capital goods data missed
expectations, pressuring the dollar which slid to its weakest in
two months.                                        
    A weaker dollar can stimulate demand for gold, making the
precious metal cheaper for holders of other currencies. 
    Also weighing on the dollar were the minutes from the latest
Federal Reserve meeting, showing policymakers were concerned
about low inflation and could be wary of raising interest rates
rapidly.                
    "It's fairly safe to say markets are not all that convinced
that we’ll get as many rate hikes as some people are
speculating," said Bart Melek, head of commodity strategy at TD
Securities in Toronto. 
    Gold is highly sensitive to rising interest rates because
they tend to strengthen the dollar and push U.S. bond yields
higher, reducing the appeal of non-yielding bullion. 
    Jerome Powell, the nominee to replace Janet Yellen as Fed
chair next year, is due to appear before Congress on Tuesday. 
    "This confirmation hearing might be seen as a risk-on
environment; a positive for gold," said Josh Graves, senior
commodities strategist at RJO Futures in Chicago.
    Also on Tuesday, Trump will meet with Senate Republicans to
discuss tax reform legislation that could accelerate U.S.
economic growth.             
    "If we see finally some sort of movement in this area, that
could reignite the 'Trumpflation' trade, risk assets could go to
the races and we could see a pullback in gold as a risk hedge,"
Mitsubishi's Butler said.
    On the technical side, gold broke through fibonacci
resistance at $1,295.40 and momentum indicators suggested that
gold prices would continue to rise, ScotiaMocatta analysts said
in a note. 
    Gold options on the December contract were set to expire on
Monday.
    Among other precious metal prices, silver        was up 0.5
percent at $17.06 an ounce, platinum        advanced 0.6 percent
at $945.65 and palladium        was up 0.9 percent at $1,006.25.

    
 (Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by David Gregorio and David Goodman)
  

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