April 17, 2018 / 2:03 PM / 6 months ago

PRECIOUS-Gold up as investors hold onto positions; but risk appetite remains

    * Gold prices turn positive
    * Shares advance as risk appetite revives
    * Palladium drops from 1-1/2 month highs 
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Recasts throughout; updates prices, headline; adds comment,
second byline, NEW YORK dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, April 17 (Reuters) - Gold turned positive
on Tuesday as some investors held onto positions, while a
sharper risk appetite benefited cyclical assets at bullion's
expense as the U.S. dollar's recovery from three-week lows
versus the euro added pressure on the metal. 
    Gold rallied to a 2-1/2 month high last week as heightened
tensions over Syria and U.S. sanctions on Russia sparked a drop
in equities and ratcheted up interest in nominally defensive
assets. Tensions have since eased, though concerns over Russia
sanctions plans still linger.             .
    Spot gold        gained 0.06 percent at $1,346.40 an ounce
by 1:37 p.m. EDT (1737 GMT), while U.S. gold futures         for
June delivery settled down $1.20, or 0.1 percent, at $1,349.50
per ounce. 
    "People are reluctant to get out of their gold positions.
Although the tensions have eased recently, I don't think they're
ready to let go of their gold completely," said Ryan McKay, TD
Securities commodities strategist.
    A gradual return of risk appetite lifted shares, with
European stocks climbing and Wall Street stocks higher after
strong earnings from Netflix, Goldman Sachs and health majors.
           
    The U.S. yield curve reached its flattest in more than a
decade on Monday after the White House said U.S. President
Donald Trump would nominate Richard Clarida as Federal Reserve
vice chairman, adding another hawkish voice to the central bank.
                  
    A flatter yield curve typically reflects views the Fed plans
to lift interest rates in the near term and is often understood
to signal concern over the macroeconomic outlook. Higher rates
tend to weigh on non-yielding bullion. 
    "The market's waiting to see what the Fed is going to do; if
they're going to have the data to move rates," said Walter
Pehowich, Dillon Gage executive vice president of investment
services.
    The U.S. dollar recovered versus the euro after hitting a
three-week high in earlier trade.       
    Meanwhile, silver        increased 0.9 percent to $16.75 an
ounce, while platinum        gained 1.3 percent at $935.70,
after earlier touching a six-day high of $936.90.
    Palladium        rose 1.3 percent to $1,014.70 an ounce
after hitting its strongest since March 1 at $1,015.30. 
    It rallied nearly 10 percent last week, the biggest weekly
gain since January 2017, on fears that U.S. sanctions on Russia
could hurt supply of the autocatalyst metal.
    "Palladium has managed to reclaim the 200-day moving average
and recent graphical levels at $973/963 and also breached the
down channel that framed the correction since last January,"
Societe Generale said in a note. 
    "$1,017 and $1,028, the two-year channel limit and the 76.4
percent retracement of the last bout of down-move, are immediate
resistance levels."

 (Reporting by Renita D. Young and Jan Harvey; additional
reporting by Swati Verma in Bengaluru; editing by Susan Fenton
and Dan Grebler)
  
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