January 29, 2018 / 10:46 AM / 9 months ago

PRECIOUS-Gold slips as U.S. dollar claws back, Treasury yields gain

    * Dollar edges up after slide to 3-year lows
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Recasts throughout; updates headline, prices; adds comment,
NEW YORK to dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, Jan 29 (Reuters) - Gold prices fell on
Monday as a recovery in the U.S. dollar and rising government
bond yields prompted investors to cash in bullion after its
sixth weekly price rise in seven weeks.
    "We’re seeing gold under pressure because the global bond
yields are up across the board," said Walter Pehowich, executive
vice president of investment services at Dillon Gage Metals.
"Germany, Italy, all up." 
    U.S Treasury yields hit multiyear highs on expectations that
central banks around the world would reduce stimulus as
economies improve. Higher yields on bonds make gold a less
attractive investment because it pays no interest.      
    Spot gold        was down 0.5 percent at $1,342.56 an ounce
by 2:05 p.m. EST (1905 GMT), while U.S. gold futures for
February delivery        settled down $11.80, or 0.9 percent, at
$1,340.30. 
    Gold has risen more than 3 percent this month, and after a
strong end to December touched its highest since August 2016
last week at $1,366.07 an ounce. 
    "Asset managers have been increasing their exposure to gold
since the beginning of the year," said TD Securities commodities
strategist Daniel Ghali. "With prices above $1,320 (an ounce),
you could expect some want to take some profits as well."
    Gold prices have benefited largely from a slide in the
dollar index to three-year lows       . A rise in the currency
on Monday after six straight weeks of losses pulled gold back. 
    Rising bond yields helped underpin the greenback ahead of a
week packed with U.S. data. It remains on track for its biggest
monthly decline since March 2016, however.       
    The currency came under pressure last week after Treasury
Secretary Steven Mnuchin indicated he was broadly supportive of
a weak dollar, although U.S. President Donald Trump later said
he wanted to see strength in the greenback.
    Traders now await U.S. employment data and the outcome of a
Federal Reserve policy meeting this week and will watch for
implications for U.S. interest rates. 
    Among other precious metals, silver        dropped 1.2
percent to $17.19 an ounce. It rose 2.3 percent last week, the
biggest gain for any of the major precious metals.
    Platinum       , this year's best-performing precious metal
so far, was down 0.2 percent at 1,007.80 an ounce after easing
0.3 percent last week in its first weekly decline in seven. 
    Palladium        was down 0.4 percent at $1,087.90 an ounce,
approaching a 2-1/2-week low.

 (Additional reporting by Nithin Prasad in Bengaluru; Editing by
Louise Heavens and Lisa Von Ahn)
  
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