February 9, 2017 / 11:53 AM / 10 months ago

PRECIOUS-Strong U.S. data topples gold from three-month highs

    * Strong U.S. data boosts dollar and bond yields
    * Record German trade surplus adds to political risk
    * SPDR Gold holdings rise for sixth straight session
    * Platinum touches three-month high

 (Updates prices)
    By Peter Hobson
    LONDON, Feb 9 (Reuters) - Gold slipped on Thursday from a
three-month high in the previous session after robust U.S.
economic data pointed to a stronger economy, increasing the
likelihood that the Federal Reserve will raise U.S. interest
    The data showing rising U.S. wholesale inventories and an
unexpectedly low number of Americans filing for unemployment
benefits also pushed up the dollar and U.S. bond yields.
    A stronger dollar makes gold more expensive for holders of
other currencies, while higher yields increase the opportunity
cost of holding non-yielding bullion. Higher interest rates
would lift yields further.  
    Spot gold        was down 0.6 percent at $1,234.36 an ounce
by 1619 GMT, while U.S. gold futures         dropped 0.3 percent
to $1,235.50.
    "If people were betting on the Fed being more relaxed and
rates being lower for longer, this (data) has muddied that
picture," said Robin Bhar at Societe Generale. 
    With gold striking $1,244.67, its highest since Nov. 11, on
Wednesday, some investors had turned cautious and were cashing
in their bets on higher prices, Bhar said.  
    Federal Reserve Chair Janet Yellen is due to appear before
U.S. senators and members of Congress on Jan. 14 and Jan. 15,
when she will be quizzed about the U.S. economy.             
    Gold has risen by about 10 percent from a mid-December low
as political risk in Europe and the United States has driven
demand for bullion as a safe haven.
    Those worries were fueled on Thursday by official data that
showed Germany's trade surplus climbed to a record high in 2016,
setting the scene for conflict between Berlin and Washington
after Trump's top trade adviser last week accused Berlin of
exploiting a "grossly undervalued" euro to gain trading
    Adding support to prices, SPDR Gold Trust, the world's
largest gold-backed exchange-traded fund, increased its bullion
holdings for a sixth day on Wednesday.              
    "We see gold as relatively underpriced, given the rally in
commodities and high level of political uncertainty," said Hamza
Khan at ING.    
    Khan said that gold could rise as high as $1,350 an ounce
before too long, having seen jumps of $10 a day.
    In other precious metals, platinum        was up 0.6 percent
at $1,020.60 an ounce. The metal used in jewellery and
autocatalysts touched $1,023, its highest since Oct. 3, earlier
in the session. 
    ING's Khan said the rally was not backed by fundamentals,
but by investors betting on a broad rise in industrial metals
and taking advantage of platinum's relative undervaluation to
gain exposure.    
    Spot silver        fell by 0.6 percent to $17.67 an ounce,
just off the $17.86 three-month high reached in the previous
session. Palladium        was up 0.3 percent at $770.97.

 (Additional reporting By Nallur Sethuraman and Arpan Varghese
in Bengaluru; Editing by David Goodman)

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