May 16, 2018 / 11:31 AM / 5 months ago

PRECIOUS-Gold rises on short-covering after falling to 4-month low

    * Dollar hits 2018 peak
    * U.S. bond yields slip from highs
    * Gold fell 1.7 pct on Tuesday 
    * Technicals suggest further losses

 (Updates prices, headline; adds comment, second byline, NEW
YORK to dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, May 16 (Reuters) - Gold prices rebounded
from a 4-1/2-month low on Wednesday on short-covering as the
U.S. dollar came off its 2018 highs and U.S. bond yields sat
near multi-year peaks.
    Spot gold        was 0.2 percent higher at $1,292.19 by 1:39
p.m. ET (1739 GMT), having gone as low as $1,286.20, its weakest
since Dec. 27.
    U.S. gold futures         for June delivery settled up
$1.20, or 0.1 percent, at $1,291.50 per ounce. 
    "A lot of people are trying to cover shorts from the break
at the $1,316 level. That was a good area people were betting
for the downside," Michael Matousek, head trader at U.S. Global
Investors.
    "Now you want to start taking some profits, because
statistically, it looks like it can bounce from the short-term."
    Gold prices barely responded to North Korea saying it might
not attend the unprecedented June 12 summit with the United
States if Washington continues to insist that it unilaterally
give up its nuclear weapons. North Korea also called off
high-level talks with South Korea scheduled for Wednesday,
blaming U.S.-South Korean military exercises.             
    But higher 10-year Treasury yields, which stayed near highs
hit on Tuesday, capped gold's gains, traders said, as the U.S.
dollar came off its highs.             
    A weaker dollar makes gold less expensive for holders of
other currencies, but higher U.S. bond yields make non-yielding
bullion less attractive to investors. 
    Bullion had suffered its biggest single-day loss since
November 2016 when it fell 1.7 percent on Tuesday to below the
200-day moving average and the psychologically significant
$1,300-an-ounce level.                    
    Gold is likely to fall to $1,275 by the end of June and
$1,250 by the end of the year as U.S. yields and the dollar
strengthen, said ABN AMRO analyst Georgette Boele. That is below
the $1,310-$1,360 range gold has inhabited since January.
    "It held up for so long on such a high level. Now you are
below $1,300 and the 200-day moving average; people who hold
long positions are a little bit nervous," she said.   
    Technical and momentum indicators suggested that gold could
fall to about $1,278, ScotiaMocatta analysts said. Fibonacci
support for the metal was at $1,287, they added.
    In other precious metals, silver        was up 0.9 percent
at $16.37 an ounce after dipping to a two-week low, $16.17.
    Platinum        eased by 0.4 percent at $889.07 per ounce,
while palladium        gained 0.4 percent at $986.75, earlier
dipping to $883.50, a five-month low.
    

 (Additional reporting by Apeksha Nair and Eileen Soreng in
Bengaluru
Editing by David Goodman and Nick Zieminski)
  
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