February 21, 2018 / 10:45 AM / a year ago

PRECIOUS-Gold steadies ahead of Fed minutes after steep slide

    * Firmer dollar keeps up pressure on gold
    * Minutes of Fed's Jan meeting due at 1900 GMT
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates throughout, adds LONDON dateline)
    By Jan Harvey
    LONDON, Feb 21 (Reuters) - Gold steadied on Wednesday after
its biggest one-day slide in 2-1/2 months as investors awaited
the minutes of the Federal Reserve's latest policy meeting later
for clues on the outlook for U.S. interest rates. 
    Fresh gains in the dollar, however, kept prices under
pressure, holding the metal near a one-week low.       
    Spot gold        was at $1,328.80 an ounce at 1030 GMT,
little changed from late on Tuesday but off an earlier low of
$1,325.20. U.S. gold futures        for April delivery were down
30 cents an ounce at $1,330.90.
    "With both the dollar recovering and real yields staying as
elevated as they are, that is creating some nervousness (in
gold)," Saxo Bank's head of commodity research Ole Hansen said.
    "Also, the FOMC minutes raise some concerns - the market is
more worried about an accelerated rate hiking cycle than any
slowdown. The market will be looking to the minutes for further
    Gold slid 1.3 percent on Tuesday, the most on any day since
Dec. 7, as a rise in U.S. yields boosted the dollar and weakened
 the appeal of non-interest bearing gold. Benchmark 10-year
Treasury yields hovered near a four-year peak on Tuesday.
    Yields have risen after the U.S. Treasury Department issued
more debt in anticipation of a higher deficit from last year's
tax overhaul and a budget deal that will lift federal spending
over the next two years.      
    Stocks fell in Europe on Wednesday, while the dollar rose
0.1 percent against the euro as traders' near-term focus shifted
to the Fed minutes.            
    The minutes, due to be released at 1900 GMT, will be watched
for comment on inflation pressures in the world's biggest
economy, which could speed up the pace of rate hikes. 
    Gold is highly sensitive to rising U.S. interest rates, as
these increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar, in which it is priced.
    Interest in physical gold has been muted this week during
the Lunar New Year holiday across much of Asia, including major
consumer China. 
    "The return of China will be closely to watched for any
renewed physical interest in Asia to stem the weakness," MKS
said in a note. The firm dollar and higher Treasury yields are
likely to keep the metal under pressure, however, it said.
    On the investment side of the market, holdings at the
world's largest gold-backed exchange-traded fund, SPDR Gold
Shares      , rose 3.2 tonnes on Tuesday to 827.79 tonnes.
    Among other precious metals, silver        was flat at
$16.45 an ounce, while palladium        was 0.8 percent lower at
$1,025.10 and platinum        was down 0.5 percent to $995.10.

 (Additional reporting by Eileen Soreng in Bengaluru; Editing by
Mark Potter)
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