July 11, 2017 / 4:44 AM / 13 days ago

PRECIOUS-Gold falls slightly as dollar, equities gain ahead of Yellen testimony

4 Min Read

    * Fed's Yellen awaited for further cues on interest rates,
dollar
    * Spot gold expected to rise to $1,225-1,231/oz range -
technicals

 (Updates prices)
    By Nithin ThomasPrasad
    BENGALURU, July 11 (Reuters) - Gold edged lower on Tuesday
on a firmer dollar and equities as the market awaited cues on
the path of interest rate hikes in the United States ahead of
Federal Reserve Chair Janet Yellen's testimony on Wednesday.
    The market was looking ahead to Wednesday and Thursday as
Yellen will deliver two days of testimony on the U.S. central
bank's semi-annual report on monetary policy and the economy.
            
    Based on the minutes of the last Federal Open Market
Committee (FOMC) released on July 5, Yellen may testify that the
Fed will seek to reduce the central bank's Treasury bond
holdings and mortgage-backed securities by August, effectively
tightening the supply of U.S. dollars. The FOMC also indicated
in the minutes that another interest rate hike would happen
later this year.
    Bullion is highly sensitive to rising rates because they
push up bond yields, increasing the opportunity cost of holding
non-interest bearing gold. A higher dollar, in which gold is
priced, would also lower the value of the yellow metal.
    "If the (Yellen) commentary is a little more hawkish, it's
going to put a little more pressure on gold again and going by
previous FOMC minutes, it's probably going to be," said MKS PAMP
analyst Tim Brown, adding "a lot of it has already been priced
in."       
    Spot gold        was down 0.2 percent at $1,211.34 per ounce
as of 0656 GMT.    
    U.S. gold futures         for August delivery fell 0.2
percent to $1,210.50 per ounce.
    "The rising dollar and rise in (Treasury) yields will
continue to mount pressure on the gold and silver in the near
term," MKS PAMP trader Alex Thorndike said in a note.
    U.S. Treasury yields slipped on Monday, in line with weak
European markets, as sharp gains following Friday's strong U.S.
non-farm payrolls report prompted investors to consolidate
positions. After Friday's jobs report, U.S. 10-year yields had
hit an eight-week high of 2.398 percent.     
    Asian shares and the dollar were slightly higher on Tuesday.
                      
    Holdings at SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund fell 0.35 percent to 832.39
tonnes on Monday from 835.35 tonnes on Friday.             
    Spot gold is expected to rise into a range of between $1,225
and 1,231 per ounce, as suggested by its wave pattern and a
Fibonacci projection analysis, according to Reuters technical
analyst, Wang Tao.
    Among other precious metals, silver        fell 0.5 percent
to $15.55 per ounce, while palladium        rose 0.3 percent to
$842.25 per ounce. 
    Platinum        fell for a third day, down 0.8 percent at
$892.35 per ounce. On Monday, prices fell to as low as $889.25,
the lowest since May 4.

 (Reporting by Nithin Prasad and Arpan Varghese in Bengaluru;
Editing by Christian Schmollinger and Subhranshu Sahu)
  

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