July 13, 2017 / 4:07 AM / 3 months ago

PRECIOUS-Gold rises after Yellen hints at only gradual tightening

    * Investors relieved as Yellen sounds less hawkish
    * Yellen set to deliver second day of testimony
    * GRAPHIC-Gold/silver ratio: tmsnrt.rs/2sSS4Uk

 (Adds comments, graphic, updates prices)
    By Nithin ThomasPrasad and Arpan Varghese
    BENGALURU, July 13 (Reuters) - Gold rose on Thursday on a
weaker dollar and lower U.S. yields after Federal Reserve Chair
Janet Yellen said the Fed would only gradually tighten monetary
policy, curbing speculation that interest rates would rise more
than once this year.
    While a weaker dollar could be helpful for gold over the
short term, the continued strength in U.S. equities remain a
drag, said INTL FCStone analyst Edward Meir.
    The U.S. economy is healthy enough for the Fed to raise
rates and begin winding down its massive bond portfolio,
although low inflation and a low neutral rate may leave the
central bank with diminished leeway, Yellen said on Wednesday.
            
    Asian shares scaled a two-year top on Thursday as investors
wagered policy tightening in the U.S. would be glacial at best,
lifting Wall Street to record peaks and lowering bond yields
almost everywhere. Against a basket of currencies, the dollar
shed about 0.3 percent at 95.499.                  
    Spot gold        rose 0.3 percent to $1,222.71 per ounce at
0715 GMT.    
    U.S. gold futures         for August delivery rose 0.3
percent to $1,222.10 per ounce.
    "We feel that the (recent) sell-off in gold, and especially
silver, was overdone and bargain hunters are now pushing prices
back up a bit," said Gregor Gregersen, Founder at
Singapore-based Silver Bullion Pte Ltd.
    Lower yields reduce the opportunity cost of holding
non-yielding gold, while a weaker dollar makes bullion cheaper
for non-U.S. investors. 
    "However, gold prices have seen only a mild recovery
following Yellen's testimony on Wednesday; there has not been
any convincing reversal as such, only a mild pullback," said
Hareesh V, head of research at Geofin Comtrade Ltd.
    A technical bounceback could push prices above the $1,230
level, around the 200-day moving average, and are likely to be
congested in the $1,248-$1,180 range in the short term, he said.
    Spot gold may revisit its July 10 low of $1,204.45 per
ounce, as its bounce from this level could have completed,
according to Reuters Technical analyst Wang Tao.              
    "Gold's fate in the short term will undoubtedly be decided
on Friday now by the U.S. CPI data which is indeed shaping up to
be a major driver for the big Dollar, equities and bonds as
well," said Jeffrey Halley, a senior market analyst at OANDA.
    Among other precious metals, silver        rose 0.2 percent
to $15.91 per ounce.
    "Interestingly, the gold/silver ratio is approaching 80,
meaning that silver is very inexpensive compared to gold and is
a particularly good bargain," Gregor noted.
    Palladium <       fell 0.2 percent to $862.00 per ounce.
Platinum        rose 0.1 percent to $917.25 per ounce, adding to
a 1.7 percent gain in the previous session, its biggest since
June 2.

 (Reporting by Nithin Prasad and Arpan Varghese in Bengaluru;
Editing by Richard Pullin and Gopakumar Warrier)
  

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