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PRECIOUS-Gold slips on firmer dollar, market looks to Fed minutes
February 22, 2017 / 4:02 AM / 9 months ago

PRECIOUS-Gold slips on firmer dollar, market looks to Fed minutes

    * Minutes of Fed's last meeting due 1900 GMT
    * Higher interest rates boost opportunity cost of holding
    * Spot gold looks neutral in $1,233-$1,240 range -technicals

 (Adds comment, updates prices)
    By Sethuraman N R
    Feb 22 (Reuters) - Gold slipped on Wednesday as the dollar
firmed, with investors looking to minutes from the U.S. Federal
Reserve's latest meeting for clues on the timing of interest
rate hikes.
    Spot gold        had dropped 0.2 percent to $1,233.41 per
ounce by 0645 GMT, while U.S. gold futures         fell 0.4
percent to $1,234.60. Spot gold dropped as much as 1 percent to
touch a one-week low of $1,225.73 in the previous session. 
    "Although U.S inflation has risen, the expectation of a rate
hike in March is not very high," said Jiang Shu, chief analyst
at Shandong Gold Group.
    "Since gold has only risen since the beginning of this year,
the market has some hesitation in moving up further ... but
still (prices) have some way to go up."
    Traders are looking ahead to the minutes from the Fed's Jan.
30-Feb. 1 meeting, due at 1900 GMT on Wednesday.            
    Spot gold looks neutral in a range of $1,233-$1,240 per
ounce, and an escape could suggest direction, according to
Reuters technical analyst Wang Tao.             
    "We are relatively agnostic on the outlook for gold, with
our 3-, 6-, and 12-month targets at $1,200, $1,200 and $1,250 an
ounce respectively," Goldman Sachs said in a note.
     "Our economists expect three rate hikes in 2017 and see the
probability of a rate hike by June at 80 percent, and we see
U.S. long dated real rates rising slightly, placing downward
pressure on gold."
    The U.S. dollar, which was boosted by hawkish comments from
various Fed officials in the previous session, was firm on
    San Francisco Fed President John Williams warned Tuesday
that the global drop in interest rates since the financial
crisis is likely to persist and will make it harder for central
banks to keep world economies healthy.             
    Philadelphia Fed President Patrick Harker suggested he would
support an interest rate increase at a mid-March policy meeting
as long as inflation, output and other data until then continue
to show the U.S. economy is growing.             
    However, Minneapolis Fed President Neel Kashkari said the
U.S. labour market had "more room to run", suggesting he did not
believe the central bank should raise rates quickly to head off
    Gold is highly-sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion, while also boosting the dollar.
    Spot silver        was firm at $17.95 an ounce.
    Platinum        rose 0.2 percent to $1,001, while palladium
       was firm at $780.

 (Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph

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