April 10, 2017 / 10:10 AM / 4 months ago

PRECIOUS-Gold slips further from five-month high on Fed expectations

    * Dollar index touches three-week high in Asian trade
    * Concerns over N. Korea and Middle East underpin gold
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices, adds comment)
    By Jan Harvey
    LONDON, April 10 (Reuters) - Gold slipped further on Monday
from the previous session's five-month high, as expectations
that the Federal Reserve will press ahead with interest rate
hikes counterweighed concerns over political tensions in North
Korea and the Middle East. 
    Spot gold        was down 0.2 percent at $1,251.55 an ounce
at 1415 GMT, while U.S. gold futures        for June delivery
were down $4.20 at $1,253.10.
    The metal rose above $1,270 on Friday for the first time
since early November following much weaker than expected U.S.
jobs data, and after the United States launched a missile strike
on a Syrian air base.
    It fell back quickly in later trade as the dollar recovered,
however, failing once again to beat key chart resistance at its
200-day moving average, which has broadly capped gains since
October.
    "There appears to have been some profit taking after that
move above the 200-day moving average on Friday," Mitsubishi
analyst Jonathan Butler said.
    "Friday's U.S. unemployment reading, which fell to a 10-year
low, would appear to confirm that the United States is
approaching full employment," he said. "This has increased the
probability of a June rate rise... (and) clearly weighed on
gold."
    The dollar started the week near three-week highs against a
basket of currencies after a key Federal Reserve official
reinforced the U.S. central bank's commitment to continue
raising interest rates.       
    Expectations that the pace of U.S. rate increases will pick
up this year, lifting the opportunity cost of holding
non-yielding bullion, have proved a major drag on gold. 
    The euro also came under pressure from worries over the
tightening race for the French presidency.
    The wider financial markets took on a more cautious tone on
Monday, with trading volumes muted by political tensions in the
Middle East and the Korean peninsula.            
    Top aides to U.S. President Donald Trump differed on Sunday
on where U.S. policy on Syria was headed after last week's
attack on a Syrian air base, while U.S. Secretary of State Rex
Tillerson warned that the strikes were a warning to other
nations, including North Korea.                         
    "Geopolitical tensions are likely to be supportive and may
put the brakes on what would otherwise be a retracement from the
mid-March uptrend," MKS said in a note. 
    Silver        was down 0.8 percent at $17.81 an ounce,
having hit its highest since Feb. 27 at $18.47 on Friday.
Platinum        was 1.4 percent lower at $938.20, while
palladium        was down 1.5 percent at $789.50.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Goodman and Susan Thomas)
  

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