June 30, 2017 / 4:52 AM / 2 months ago

PRECIOUS-Gold edges down as hawkish central banks weigh

    * Gold set for first monthly fall in 2017; up 8 pct in H1
    * Palladium prices surged 25 pct this year, best year since
2010

 (Recasts, updates prices, adds quote)
    By Vijaykumar Vedala
    BENGALURU, June 30 (Reuters) - Gold inched lower on Friday
as hawkish comments from major central banks suggested a shift
toward tighter monetary policies, while the dollar nursed its
losses.
    Comments from top central bankers including European Central
Bank head Mario Draghi, Bank of England Governor Mark Carney,
and top policymakers at the Bank of Canada earlier this week
have indicated that quantitative easing is being put back in its
box and interest rates are going to go up.                      
    Gold is highly sensitive to rising interest rates, which
increase the opportunity cost of holding non-yielding bullion.
However, losses in the dollar, in which it is priced, have been
offsetting the impact of higher yields to keep gold range-bound.
    Spot gold        fell 0.2 percent to $1,242.56 per ounce, as
of 0736 GMT. U.S. gold futures         for August delivery were
down 0.3 percent at $1,242.60 per ounce.
    Gold slid nearly 2 percent in June in its first monthly
decline this year, but gained about 8 percent so far in 2017.  
    Gold has been range-bound between $1,243-$1,248, and appears
to be lacking a catalyst for price action in any direction, MKS
PAMP analyst Tim Brown said in a note. 
    "Central banks seem to be moving toward a more hawkish view
and the resulting rise in the bond yield curve is putting
downward pressure on gold prices."
    On Thursday, Germany's 10-year government bond yield rose to
a seven-week high, and benchmark U.S. Treasury yields touched 
six-week highs on the likelihood that central banks in Europe
will become less accommodative.                          
    "Central banks worldwide are going to have some kind of less
stimulative economic policies. About the pace of their exit
strategies, the only question is regarding the matter of degree
and not the direction itself," said Mark To, head of research at
Hong Kong's Wing Fung Financial Group.
    In the wider markets, the dollar index       , which
measures the greenback against a basket of currencies, was up
0.1 percent after hitting a nine-month low at 95.470 on Friday.
Asian shares were pulled down by weaker European and U.S.
markets.
    Among other precious metals, silver is up 4 percent for the
year despite having shed over 9 percent in the second quarter.
Spot silver        slipped 0.2 percent to $16.55 per ounce on
Friday. 
    Platinum        dipped 0.2 percent to $917.90, and slipped
nearly 3 percent this quarter, but is up about 2 percent for the
year. 
    Palladium       , which has been the best performing
precious metal this year, dipped 0.4 percent to $844 per ounce.
The metal surged nearly 25 percent this year, and is poised to
have its best year since 2010.   

 (Additional reporting by Nithin Prasad in Bengaluru; Editing by
Richard Pullin and Sherry Jacob-Phillips)
  

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