July 5, 2018 / 9:57 AM / 9 months ago

PRECIOUS-Gold slips ahead of Fed minutes despite softer dollar

    * Federal Reserve June minutes due at 1800 GMT
    * Spot gold may retrace to support at $1,248/oz - technicals
    * Dollar falls to one-week low

 (Adds comment on platinum, updates prices)
    By Eric Onstad
    LONDON, July 5 (Reuters) - Gold drifted lower on Thursday
despite a weaker dollar as investors worried that U.S. Federal
Reserve minutes would highlight the prospect of further rate
    Spot gold        was down 0.2 percent at $1,254.31 an ounce
by 1345 GMT. The metal touched a one-week high of $1,261.10 in
the prior session and had gained over $20 from Tuesday's low of
$1,237.32, its weakest since Dec. 12.
    U.S. gold futures         for August delivery were up 0.1
percent at $1,255.10 an ounce.
    The dollar index         fell to its lowest level in more
than a week while the euro climbed half a percent to near
three-week highs following strong German data.                
    "Gold is not making huge headway even though we're in a
slightly weaker dollar environment. The market is very much in a
wait-and-see mode ahead of the Fed minutes," said Jonathan
Butler, commodities analyst at Mitsubishi in London.
    The minutes of the U.S. central bank's June meeting are
scheduled to be published at 2 p.m. EDT (1800 GMT). During the
discussion, the Fed had projected two more rate hikes in 2018
for a total of four.                         
    The minutes may point to concerns about inflation or that
members want monetary policy to keep pace with fairly strong
economic growth, Butler said.
    "Those sorts of sentiments when they come out could weigh on
gold and could give the dollar somewhat of a boost."      
    Gold is highly sensitive to rising interest rates, as these
increase the opportunity cost of holding non-yielding bullion,
while boosting the dollar, in which the metal is priced.
    Investors are also awaiting the non-farm payrolls and
unemployment data on Friday. 
    "One would not like to have any bullish bets on gold when
the labour market trend is strong," ThinkMarkets chief market
analyst Naeem Aslam said. 
    Spot gold may retrace to support at $1,248 per ounce as it
has failed to break resistance at $1,258, Reuters technicals
analyst Wang Tao said.         
    Physical gold demand has been lacklustre in India, the
second-biggest gold consumer after China, Commerzbank said.
    "Since Chinese traders are also buying only small amounts of
gold at present, the gold price is finding no support from this
side, either," it said in a note.  
    Among other precious metals, silver        shed 0.2 percent
to $16.02 an ounce.
    Palladium        rose 0.1 percent to $947.10 an ounce, while
platinum        added 0.5 percent at $844.10 an ounce after
touching the lowest levels since 2008 of $793 on Tuesday.
    "It's a speculative driven sell-off in platinum, it's not a
fundamental driven sell-off," Butler said.
    "And when we think about the fundamentals, at $800, most
South African mines are losing money. So if we maintain these
prices sub-$900, there will eventually be a supply-led

 (Additional reporting by Karen Rodrigues in Bengaluru; Editing
by Dale Hudson/David Evans)
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