October 18, 2017 / 10:46 AM / 2 years ago

PRECIOUS-Gold slips as dollar firms on speculation over Fed chief

    * Next Fed chair could be policy hawk -Reuters poll
    * Trump has pool of five candidates, including incumbent
Yellen
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices; adds comment, NEW YORK dateline)
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, Oct 18 (Reuters) - Gold fell for a third
straight session on Wednesday on pressure from the U.S. dollar's
gains for much of the session and amid speculation that the next
chair of the Federal Reserve could be a policy hawk.
    Spot gold        was down 0.3 percent at $1,281.50 an ounce
by 2:21 p.m. EDT (1821 GMT), having touched its lowest since
Oct. 9 at $1,276.73.
    U.S. gold futures         for December delivery settled down
$3.20 or 0.3 percent, at $1,283 per ounce. 
    As many as five people are in the running to be the next Fed
chair, a source told Reuters on Tuesday.            
    "Interest rate hikes had not been fully priced in for next
year. That has changed massively following speculation that (Fed
Governor Jerome) Powell might become the next chairman," said
Commerzbank analyst Carsten Fritsch.
    Powell is expected to be the next Fed chairman, according to
a slim majority of economists in a Reuters poll, though most of
them said that incumbent Janet Yellen would be the best option.
            
    The dollar rose to a 1-1/2-week high before turning lower as
traders digested more details on U.S. President Donald Trump's
tax overhaul. 
    U.S. tax reform is expected to stimulate economic growth and
inflation, as is therefore seen as negative for gold.        
    The Fed meanwhile is widely expected to raise interest rates
for the third time this year in December.
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion while boosting the dollar, in which it is priced.
    "With dollar strength in mind, it would present further
risks to gold, but I'm waiting to see how the Catalonia crisis
unfolds tomorrow, pinpointing a possible next move for gold, in
either direction," said Jameel Ahmad, vice president of market
research at FXTM.
    Gold is often used as a store of wealth in times of
political or economic uncertainty.
    "The key support level for gold is $1,275 ... and $1,260
(per ounce) more importantly," said Bill O'Neill, partner at
Logic Advisors in Upper Saddle River, New Jersey, referring to
the 100-day moving average and an October low.
    In other precious metals, silver        was flat at $17 an
ounce after touching its lowest in more than a week.
    Platinum        slipped by 1 percent to $920.90 an ounce,
while palladium        eased 2.14 percent at $957.55 per ounce.

    
 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Meredith Mazzilli)
  
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