April 4, 2017 / 10:37 AM / 10 months ago

PRECIOUS-Gold hits one-month high on dollar, security concerns

    * Higher dollar a headwind for U.S. economy
    * Gold tests 200-day moving average, around $1,259

 (Updates prices)
    By Pratima Desai
    LONDON, April 4 (Reuters) - Gold prices hit a one-month high
on Tuesday, boosted by a lower dollar after U.S. economic data
persuaded investors to reassess the idea of an imminent Fed rate
hike, while security concerns rose following a bomb blast in
Russia the previous day.
    Spot gold        was up 0.2 percent at $1,255.9 an ounce by
1350 GMT after touching $1,261.15, its highest since February 
27. U.S. gold futures         climbed 0.3 percent to $1,257.8.
    The U.S. Institute for Supply Management said its index of
national factory activity fell to 57.2 in March from 57.7 in
February, while automakers reported a 1.6 percent drop in U.S.
sales last month.                         
    "The dollar's gains could be coming to an end. It has been
rising and that's a headwind for the U.S. economy," said Marex
Spectron analyst Guy Wolf. 
    "People are not so worried about inflation, they don't think
the Fed is behind the curve. People are not so optimistic about
(U.S. President Donald) Trump being able to deliver quickly on
his election promises about taxes and infrastructure."
    A falling U.S. currency makes dollar-denominated metals
cheaper for holders of other currencies.
    The blast in a St Petersburg train carriage on Monday that
killed 14 people and wounded 50 has fuelled security concerns
around the world, triggering interest in gold seen as a safe
place to park assets during times of uncertainty.             
    Investor interest can be seen in holdings of SPDR Gold Trust
     , the world's largest gold-backed exchange-traded fund,
which climbed 0.53 percent to 836.77 tonnes on Monday from
832.32 tonnes on Friday.          
    "While the European elections, Brexit negotiations and
Trump's foreign policies could reignite safe-haven interest,
gold is not without hurdles," Standard Chartered analysts said
in a note. "We believe the fragile physical market and Fed rate
hikes will create a softer footing for gold prices."
    The U.S. Federal Reserve raised interest rates in March. Its
next policy meeting is in May.   
    On the technical front, gold needs to close above the
200-day moving average, currently around $1,259, to gather
momentum for $1,263.80, the Feb. 27 peak, chart analysts say.
    Spot silver        rose 0.3 percent to $18.28, having hit a
one-month high at $18.412 an ounce.
    Platinum        gained 0.8 percent to $959.0 and palladium
added 0.6 percent to $807.2.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Evans and Dale Hudson)
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