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PRECIOUS-Gold prices recover as U.S. dollar slips
December 19, 2016 / 4:10 AM / a year ago

PRECIOUS-Gold prices recover as U.S. dollar slips

* Spot gold may bounce moderately to $1,153 per
    * SPDR Gold holdings down 0.63 pct on Friday
    * SPDR holdings fall more than 11 pct since Nov
    * Specs cut net longs in COMEX gold for 5th straight week

 (Updates prices)
    By Swati Verma
    BENGALURU, Dec 19 (Reuters) - Gold rose on Monday, extending
its recovery from a 10-1/2-month low hit last week, as the U.S.
dollar slipped from a 14-year peak against a basket of
    Spot gold edged up 0.7 percent to $1,141.61 an ounce
by 0651 GMT. The bullion touched $1,122.35 on Thursday, its
weakest since Feb. 2.
    Gold now appears to have found a base, however, upside will
be limited as investors look to other markets for yield, ANZ
said in a note.
    U.S. gold futures gained 0.6 percent to $1,143.60
per ounce on Monday.
    Gold is likely to rebound to $1,160-$1,180 levels before the
year-end, said Mark To, head of research at Hong Kong's Wing
Fung Financial Group.
    The dollar index, which measures the greenback
against a basket of currencies, fell 0.4 percent to 102.590. The
dollar hit a 14-year high of 103.56 following the Federal
Reserve's hawkish interest rate forecasts on Wednesday. 
    The Fed hiked rates for the first time in a year last week
and projected three more increases in 2017, up from the two
projected in September. 
    Richmond Fed President Jeffrey Lacker said on Friday the Fed
will likely need to raise interest rates more than three times
next year and faces challenges in gradually cooling off the U.S.
    Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets such as bullion,
while boosting the dollar, in which it is priced. 
    "Medium- to long-term view (for gold) is not optimistic,"
said Wing Fung's To.
    "I won't be surprised if gold prices move down to $1,050 to
$1,080 by the start of next year."
    Spot gold may bounce moderately to $1,153 per ounce as it
has found a support at $1,121, according to Wang Tao, Reuters
analyst for commodities technicals. 
    Holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell 0.63 percent to 836.99
tonnes on Friday. Holdings are down over 11 percent since
    "(The fall in ETF holdings) illustrates the view investors
are moving away from gold at least for the medium term," To
    Hedge funds and money managers cut their net long position
in COMEX gold contracts for the fifth straight week, taking it
to a 10-month low in the week to Dec. 13, U.S. Commodity Futures
Trading Commission data showed on Friday. 
    Silver gained 0.3 percent to $16.12 per ounce.
    Platinum fell 0.6 percent at $921.50. The white metal
jumped 3.7 percent on Friday.
   Palladium was down 0.7 percent at $690.25 an ounce,
after falling to a one-month low in the prior session.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Amrutha Gayathri)

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