September 26, 2017 / 10:32 AM / 10 months ago

PRECIOUS-Gold slips after Yellen says Fed needs gradual rate hikes

    * Fed Chair Janet Yellen's statement pressure gold
    * United States-North Korea tensions remain
    * Spot platinum falls to two-month low
    * GRAPHIC-2017 asset returns:

 (Recasts, updates prices; adds comment, second byline, NEW YORK
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, Sept 26 (Reuters) - Spot gold dipped more
than 1 percent after Federal Reserve Chair Janet Yellen said the
central bank needed to continue gradual rate hikes, despite weak
    "       is not what the market expected. We expected
emergency accommodation with the very large debt that we’re
facing," said George Gero, managing director of RBC Wealth
Management in New York, referring to Yellen's statement that
pressured gold prices.
    Spot gold        was down 1.13 percent at $1,295.28 per
ounce by 3:27 p.m. EDT (1927 GMT), while U.S. gold futures for
December delivery         settled down 0.75 percent at
    Gold is highly sensitive to interest rates and returns on
other assets, as rising rates lift the opportunity cost of
holding non-yielding bullion.   
    "A little recovery in (U.S. Treasury) yields, along with a
stronger dollar has pressured gold. And the risk-averse trading
from yesterday is easing off," said James Steel, chief metals
analyst at HSBC Securities in New York. 
    The U.S. dollar index        rose around 0.3 percent against
a basket of currencies, making commodities including gold more
expensive for holders of other currencies. 
    This came after the metal rose to a one-week high at
$1,313.54 earlier in the session, extending gains after rising
tensions between North Korea and the United States buoyed prices
on Monday.             
    Bullion is used as an alternative investment during times of
political and financial uncertainty. 
    U.S. President Donald Trump warned North Korea on Tuesday
that any U.S. military option would be "devastating" for
Pyongyang, but said the use of force was not Washington's first
option to deal with the North's ballistic and nuclear weapons
    Political uncertainty pushed down a gauge of world stocks
    In physical demand, China's net gold imports via main
conduit Hong Kong plunged 55 percent in August from the previous
month, data showed.             
    Meanwhile, silver        was down 2.04 percent at $16.83 per
ounce, after dropping to $16.76 per ounce, its lowest since Aug.
    Platinum        was down 1.58 percent at $925.30 per ounce,
after reaching $918.75, the lowest since July 28. 
    Palladium        was up 0.62 percent at $916.05 per ounce.

 (Additional reporting by Nithin Prasad and Arpan Varghese in
Bengaluru; Editing by Mark Potter and Andrew Hay)
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