April 10, 2015 / 10:06 AM / 5 years ago

PRECIOUS-Gold up, but set for weekly fall as U.S. rate bets buoy dollar

(Updates prices, adds comment)

* Gold down for the week after three-week rally

* Small China premiums, forecast of slower Indian purchases

* Dollar hovering at three-week high vs currency basket

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, April 10 (Reuters) - Gold rose on Friday as chart levels were broken, but was still heading for its first weekly fall in four weeks, pressured by a stronger dollar and renewed expectations for a U.S. rate hike this year.

Spot gold was up 1 percent at $1,206.46 an ounce by 2:23 p.m. EDT (1823 GMT). Flat initially, it gained momentum after a break of technical resistance at $1,196 that triggered automatic buy orders.

“This move is coming during a week when we didn’t really have any gold-positive news but ...the way gold is putting up a fight at the moment is potentially giving some confidence to the market,” Saxo Bank senior manager Ole Hansen said.

“But to make headwinds above the resistance area around $1,225 we need to see some real buying coming in.”

Bullion was still down around 0.3 percent for the week, however, having pulled back from Monday’s seven-week high of $1,224.10, reached after last week’s weak U.S. employment report.

U.S. gold for June delivery settled up 0.9 percent at $1,204.60 an ounce.

“The 100-day moving average should serve as some upside resistance,” said Matt Bradbard, director at RCM Alternatives, boutique advisory firm in Chicago, referring to spot gold’s 100-day moving average at $1,211.69, just above the session high.

Gold on Friday shrugged off the impact of a stronger dollar and world equity markets, which tested record highs.

But the longer-term outlook is still bearish, traders said, and prices had surrendered gains after Federal Reserve officials suggested a June rate hike could still be in play.

Investors tend to shun gold, which does not pay interest, when market expectations point to U.S. interest rates rising.

Gold could drop to a five-year low of $1,100 this year due to the relative health of the U.S. economy compared to Europe and emerging markets, GFMS analysts at Thomson Reuters said.

Gold buying in Asia was slow this week as firmer spot prices turned off buyers, especially in China, and a potentially weak monsoon threatened demand in India.

Premiums for physical gold at the Shanghai Gold Exchange stood at a modest $1-$2 an ounce over the global spot benchmark on Friday.

Spot silver rose 1.7 percent to $16.39 an ounce, while platinum gained 1.4 percent to $1,170.50 an ounce and palladium was up 2.1 percent at $775.95 an ounce. (Additional reporting by Manolo Serapio Jr in Singapore; Editing by Ruth Pitchford, Keith Weir, Grant McCool)

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