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PRECIOUS-Gold prices edge up, but U.S. rate hike outlook drags
March 8, 2017 / 4:09 AM / 9 months ago

PRECIOUS-Gold prices edge up, but U.S. rate hike outlook drags

    * Focus squarely on timing of potential U.S. rate hike
    * Markets await U.S. non-farm payroll data on Friday
    * Gold may stabilize in $1,210-$1,213/oz support zone
-technicals

 (Updates prices, adds comment)
    By Arpan Varghese
    March 8 (Reuters) - Gold prices inched up on Wednesday, but
remained near four-week lows hit in the previous session as
expectations for a U.S. rate hike in March gathered momentum.
    Federal Reserve Chair Janet Yellen last week said the
central bank was poised to lift benchmark U.S. rates provided
jobs and inflation data held up, comments seen as cementing
plans for an increase at the Fed's March 14-15 meeting.
           
    Investors are now awaiting non-farm payrolls data for
February on Friday as a key barometer of the U.S. economy.
    "Gold has made a modest recovery this morning as early Asian
buyers are sighted. Whether they are picking up gold at a
bargain rate or are catching a falling knife remains to be
seen," said Jeffrey Halley, senior market analyst at OANDA.
    Spot gold        had edged up 0.1 percent to $1,217.2 per
ounce at 0643 GMT. It marked its lowest since Feb. 3 at $1,213.6
an ounce in the previous session.
    Bullion is highly-sensitive to rising U.S. interest rates,
as these increase the opportunity cost of holding the
non-yielding metal, while boosting the dollar in which it is
priced.
    "Gold will likely trade in a narrow band, between the $1,210
and $1,220 levels leading up to the non-farm payroll data and
will exhibit a declining trend going into the Fed meeting," said
Jiang Shu, chief analyst at Shandong Gold Group.
    However, he said there could be a short-term upwards
correction if the payroll data was not as strong as expected.
    "(But) if the numbers are positive, prices could jump below
$1,200," Shu added.
    Spot gold may stabilize in a support zone of $1,210-$1,213
per ounce and then bounce towards a narrow range of
$1,219-$1,223, according to Reuters technical analyst Wang Tao.
            
    "We still see specs using dips to build inventory, however
we may see some nervousness creep into the market should we test
support at $1,210 and open up $1,200," MKS PAMP Group trader Sam
Laughlin said in a note.
    Jeffrey Gundlach, chief executive officer at DoubleLine
Capital, said on Tuesday he expected the Fed to begin a campaign
this month of "old school" sequential interest rate hikes until
"something breaks", such as a U.S. recession.             
    In other precious metals, silver        edged down by 0.1
percent to $17.47 per ounce, after touching $17.42 earlier in
the session, matching the low last hit on Feb. 6.
    Platinum        inched lower by 0.3 percent, to $956.95 per
ounce. The metal hit its lowest since Jan. 20 at $954 in the
previous session.
    Palladium        eased 0.2 percent, to $770.43 per ounce.  

 (Reporting by Arpan Varghese in Bengaluru; Editing by Joseph
Radford and Sunil Nair)
  

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