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PRECIOUS-Gold prices extend gains in technical rebound
December 28, 2016 / 4:07 AM / a year ago

PRECIOUS-Gold prices extend gains in technical rebound

(Updates prices, adds detail)
    * SPDR Gold holdings down 0.14 pct on Tuesday
    * SPDR Gold holdings down about 13 pct since U.S. elections
    * Spot gold may bounce to $1,210- technicals

    By Swati Verma
    BENGALURU, Dec 28 (Reuters) - Gold prices rose on Wednesday,
extending gains after it hit a near two-week high in the
previous session, on a technically-driven rebound in thin volume
amid a slightly weaker dollar.
    Spot gold was up half a percent at $1,143.98 an ounce
by 0636 GMT. Gold hit its strongest since Dec. 14 on Tuesday at
    U.S. gold futures also rose 0.5 percent at $1,144.50
per ounce.
    "Currently we do not see many strong fundamental reasons to
push gold prices further down. However, after the Fed conference
in December, there should be some technical rebound in gold
prices," said Jiang Shu, chief analyst, Shandong Gold Group.
    "Since there are a few trading days left until the end of
this year we think that the rebound will not be very strong."
    Spot gold may bounce to $1,210 per ounce before falling
towards its Dec. 15 low of $1,122.35 in the next three months,
according to Reuters technical analyst Wang Tao. 
    Reflecting bearish investor sentiment, assets in the SPDR
Gold Trust, the world's largest gold-backed
exchange-traded fund, fell 0.14 percent to 823.36 tonnes on
Tuesday. Holdings are down about 13 percent since the U.S.
presidential elections. 
    "Currently there are very strong expectations of more rate
hikes next year," said Shu, adding that declining gold prices
have had a negative impact on the bullish sentiment in physical
gold prices.
    The Federal Reserve raised U.S. interest rates earlier this
month for the first time in a year and signalled three more
increases next year from the previous projection of two.
    U.S. consumer confidence shot to its highest in more than 15
years in December as Americans saw more strength ahead in
business conditions, stock prices and the job market following
the election of Donald Trump as president in November.
    The upbeat data helped underscore expectations that the U.S.
central bank would raise interest rates at a faster pace next
year, which lowers demand for non-yielding assets such as
bullion, while boosting the dollar, in which it is priced.
    The dollar index, which measures the greenback
against a basket of currencies, was down 0.1 percent at 102.90.
    "We don't think much will be going on in the markets for the
balance of the week. Sharp moves in either direction must be
weighed against the fact that liquidity remains fairly light,"
INTL FCStone analyst Edward Meir said in a note.
    Silver was down 0.3 percent at $15.90 an ounce. The
metal rose nearly 1.5 percent on Tuesday.
    Platinum was up 0.5 percent at $904.70 and palladium
 rose 0.5 percent at $674.47, after rising over 2 percent
in the previous session.

 (Reporting by Swati Verma in Bengaluru; Editing by Christian
Schmollinger and Biju Dwarakanath)

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