March 20, 2017 / 3:32 AM / 4 months ago

PRECIOUS-Gold holds firm as Fed rate hike guidance weighs on dollar

3 Min Read

    March 20 (Reuters) - Gold prices edged up on Monday as the
dollar stayed on the defensive, finding support from the U.S.
Federal Reserve's conservative guidance on the path of rate
hikes this year.
       
    FUNDAMENTALS
    * Spot gold        was up 0.2 percent to $1,231.05 per ounce
by 0100 GMT. 
    * U.S. gold futures         were mostly unchanged at
$1,230.80.
    * The dollar index       , which measures the greenback
against a basket of currencies, was down 0.1 percent to 100.230.
    * Markets were bracing for a packed week of Fed messaging
with no less than nine different policy makers set to speak,
including Chair Janet Yellen on Thursday.
    * Yellen's cautious guidance last week has investors pricing
in almost no chance of another rate rise at the next policy
meeting in May, rising to around 50-50 for June.           
    * Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.35 percent to 834.10
tonnes on Friday from 837.06 tonnes on Thursday.
    * Hedge funds and money managers slashed their net long
position in COMEX gold for the second straight week in the week
to March 14, and also cut long positions in silver, U.S.
Commodity Futures Trading Commission data showed on Friday.
            
    * Money managers cut their net long position in bullion by
44,058 lots to 49,835 lots, the lowest since early January.
During that week, prices        dropped about 1.5 percent on
firm expectations that the Federal Reserve would hike U.S.
interest rates in March and as the dollar strenthened.
    * Gold premiums rose in China this week as traders said
supply of the precious metal was limited due to tightening
import restrictions to stem currency outflows.             
    * Russia produced 14.69 tonnes of gold in January, up from
14.05 tonnes in the same period last year, the finance ministry
said on Friday.             
    * ANZ is scaling back its commodities market exposure by
quitting trading activity in base metals, coal and iron ore and
electricity, the bank confirmed.             
    * Financial leaders of the world's biggest economies dropped
a pledge to keep global trade free and open, acquiescing to an
increasingly protectionist United States after a two-day meeting
failed to yield a compromise.             
    * U.S. factory output increased for a sixth straight month
in February while consumer sentiment rebounded in early March,
underscoring the economy's resilience even as growth appears to
have slowed significantly in the first quarter.             
    
    
    DATA AHEAD (GMT)
    
     0700  Germany     Producer prices         Feb 
     1000  Euro zone   Labour costs            Q4 
     1230  U.S.        National activity index Feb 

 (Reporting By Nallur Sethuraman in Bengaluru; Editing by
Richard Pullin)
  

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