October 4, 2016 / 9:57 AM / a year ago

PRECIOUS-Gold slips for sixth day after upbeat U.S. data

* Gold slides to lowest since mid September
    * Platinum hits more than 3-month low below $1,000/oz
    * GRAPHIC-2016 metal returns: link.reuters.com/cag37s

 (Updates prices)
    By Jan Harvey
    LONDON, Oct 4 (Reuters) - Gold fell for a sixth day on
Tuesday, hitting its lowest in more than two weeks after upbeat
U.S. manufacturing data stoked expectations that the Federal
Reserve would hike interest rates by year-end, driving the
dollar higher. 
    Gold is highly sensitive to rising U.S. interest rates,
which lift the opportunity cost of holding non-yielding bullion,
while boosting the dollar, in which it is priced. The dollar
index hit a near two-week high on Tuesday. 
    Spot gold was down 0.2 percent at $1,308.90 an ounce
at 1130 GMT, while U.S. gold futures for December
delivery were down $1.30 an ounce at $1,311.40. Spot prices have
now wiped out all of last month's slim gains. 
    Gold remains within the $1,300-$1,350 range it has stuck
broadly within for the last six weeks, however. Traders remain
on the sidelines ahead of U.S. payrolls data for September, due
at the end of the week, and other key events later in the year.
    "We've got the non-farm payrolls data on Friday, so a lot of
people will be cautious ahead of that," Afshin Nabavi, head of
trading at MKS in Switzerland, said. "The market is generally a
bit disappointed with gold. Whatever happens, we just don't seem
to be able to get above $1,350."
    "I guess everyone is waiting for the U.S. election (in
November), and then we'll see what happens in December with the
rate hike."
    While Monday's data showing U.S. factories ramped up
activity in September fuelled speculation that the Fed would
lift rates at its December meeting, officials remain cautious.
    The Fed would probably not be able to cut interest rates as
aggressively as the last time around if it were faced with a
U.S. recession in the next few years, New York Fed President
William Dudley said on Monday. 
    Gold priced in sterling outperformed spot to rise
0.6 percent on Tuesday as the pound slid to a 31-year low versus
the dollar, with worries over the impact of Britain's departure
from the European Union rattling the market. 
    Chinese markets being shut for the Chinese National Day
holidays from Oct. 1-9 kept a lid on physical gold demand.
    "It would appear that weaker physical demand has put the
brakes on the rise in gold prices," Commerzbank said in a note.
    Silver was up 0.1 percent at $18.75 an ounce.
Platinum was up 0.1 percent at $1,004.50 an ounce, off an
earlier three-month low of $996.95, while palladium was
little changed at $711.20 an ounce.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
editing by Susan Thomas and Louise Heavens)

Our Standards:The Thomson Reuters Trust Principles.
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