July 25, 2018 / 10:13 AM / a year ago

PRECIOUS-Gold steadies near 1-year low as dollar slips

    * SPDR holdings rise more than 1 percent in a week
    * Headwinds from U.S. tightening to persist in short term

 (Updates prices)
    By Pratima Desai
    LONDON, July 25 (Reuters) - Gold steadied near one-year lows
on Wednesday as the dollar slipped, while lack of clarity over
where a trade dispute between the United States and Europe is
heading kept most markets range-bound.
    Spot gold        was up 0.7 percent at $1,232.07 an ounce at
1158 GMT. It touched $1,211.08 last week, the lowest since July
last year, for a loss of more than 10 percent since April 11.
U.S. gold futures         gained 0.6 percent to $1,232.40.
    A sliding U.S. currency makes dollar-denominated gold
cheaper for holders of other currencies, which potentially could
boost demand.
    European Commission President Jean-Claude Juncker will
travel to Washington on Wednesday for talks focused on trade
tensions with U.S. President Donald Trump. The U.S. has imposed
tariffs on EU steel and aluminium.             
    "It makes sense that gold has underperformed. There is a lot
of talk about risk off, but major equity markets have been
pretty robust and the dollar has been strong," said Marcus
Garvey, commodities strategist at ICBC Standard Bank.
    "There is scope for the dollar to ease a bit, which should
provide support for gold, though an aggressive rally in the
short term is unlikely. From a medium term perspective we think
this is a reasonable level to add length (buy)."
    ICBC expects the gold price to average $1,260 an ounce in
the third quarter and $1,300 in the fourth quarter.
    Rising investor interest in gold can be seen in the holdings
of the largest gold-backed exchange-traded-fund (ETF), New
York's SPDR Gold Trust      , which are up more than one percent
to 25.803 million ounces since July 18.
    SPDR holdings have been trending down since April 30, partly
due to higher U.S. interest rates, raising the cost of holding
gold, which earns no income, interest or dividends and costs
money to store and insure.
    The U.S. central bank raised interest rates in June for the
seventh time since December 2015. Expectations are for two more
rises this year.        
    "In the short term, upside should be limited as head-winds
from the U.S. rate cycle persist," Julius Baer analysts said in
a note. "With the dollar expected to eventually roll over and
upside pressure to U.S. bond yields easing, medium- to
longer-term buying opportunities should open up."
    Silver        gained 0.7 percent to $15.55 an ounce,
palladium        rose 1.8 percent to $930.60 an ounce and
platinum added 1.4 percent to $839.95 an ounce.

 (Additional reporting by Karen Rodrigues in Bengaluru
Editing by Alexandra Hudson and Elaine Hardcastle)
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