March 15, 2018 / 4:40 AM / 7 months ago

PRECIOUS-Gold slips as dollar gains on U.S. jobs data, political tensions underpin

    * Britain expels Russian diplomats, drawing Moscow's ire
    * New U.S. adviser seen backing stronger dollar

 (Recasts; updates prices; adds comment, byline, NEW YORK to
dateline)
    By Renita D. Young and Maytaal Angel
    NEW YORK/LONDON, March 15 (Reuters) - Gold prices dipped on
Thursday, under pressure from a stronger U.S. dollar, although
tensions between Britain and Russia limited the precious metal's
decline a day after it hit a one-week high.    
    The dollar rose versus a currency basket        as traders,
awaiting next week's Federal Reserve meeting, eyed data that
showed the number of Americans filing for unemployment benefits
fell last week.       
    Moscow said it would retaliate against London's move to
expel 23 Russian diplomats over a nerve toxin attack on a
Russian former double agent in Britain.                         
    Spot gold        was down 0.5 percent at $1,317.52 per ounce
by 1:40 p.m. EST (1740 GMT), edging away from Wednesday's
one-week high, while U.S. gold futures         for April
delivery settled down $7.80, or 0.6 percent, at $1,317.80 per
ounce. 
    "The headwinds gold faces are people starting to talk about
the interest rate increase and the possibility of a fourth
interest rate hike," said Chris Gaffney, president of world
markets at EverBank.
    Gold is highly sensitive to rising U.S. interest rates,
because it becomes less attractive to investors since it does
not bear interest. A stronger dollar makes dollar-priced gold
costlier for investors using other currencies.
    "Gold is finding support from the escalating political
crisis between the UK and Russia," Commerzbank said in a note,
but added it could face headwinds after the U.S. president's new
economic adviser Larry Kudlow had spoken out in favor of a
strong dollar.             
    While some market participants said the dollar strengthened
after Kudlow's comments, others questioned the net effect of his
statements.
    "I think Kudlow's comments will probably support more of a
trade war rhetoric than a stronger dollar," said a Hong
Kong-based trader, adding "gold needs to close above the $1,330
level to start getting some traction."
    U.S. stocks opened higher, supported by strong economic
data, although fears that Trump's decision to impose fresh
tariffs on China may escalate into a trade war simmered in the
background.     
    "Instead of moving on fundamentals, the market is moving on
rhetoric these days," said Walter Pehowich, executive vice
president of investment services at Dillon Gage Metals. He noted
that Treasuries and the greenback have been rangebound, keeping
gold rangebound.
    Silver        fell 0.5 percent at $16.42 per ounce after
seeing a 9-day low of $13.35. Platinum        fell 0.7 percent
at $951.49 per ounce.
    Palladium        dropped 0.4 percent at $983.20 per ounce
after hitting $1,006.30 in the previous session, a high since
March 1.

 (Additional reporting by Nithin Prasad in Bengaluru
Editing by Adrian Croft and James Dalgleish)
  
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