July 23, 2018 / 7:13 PM / 5 months ago

PRECIOUS-Gold eases toward one-year lows as dollar rebounds

    * Dollar resumes rise after Trump comments last week
    * Trump spat with Iran has little effect on gold prices
    * Gold hovers above strong technical support at
$1,200-$1,220
    * Prices likely to revive towards $1,300 -Reuters poll

 (Updates prices; adds comment, NEW YORK dateline)
    By Devika  Krishna Kumar and Peter Hobson
    NEW YORK/LONDON, July 23 (Reuters) - Gold prices fell toward
one-year lows on Monday as the U.S. dollar held on to strength
against the currencies of key bullion consumers China and India.
              
    Gold has tumbled 10 percent since mid-April as a surge in
the greenback made dollar-priced bullion more expensive for
buyers with other currencies.              
    There was some respite for gold last week when U.S.
President Donald Trump branded the dollar's strength as bad for
the economy, knocking the currency from one-year highs, but the
breather proved short-lived.              
    "We're seeing a bid in the dollar that's driving the gold
low today, but we do think the dollar is set to weaken going
forward, so we do see gold trading higher on the near term, two
to three months outlook," said Daniel Ghali, commodities
strategist at TD Securities.     
    Spot gold        was down 0.5 percent at $1,224.67 an ounce
by 2:36 p.m. EDT (1836 GMT), close to last Thursday's low of
$1,211.08, while U.S. gold futures         for August delivery
settled down 0.4 percent at $1,225.60. 
    A war of words between Trump and Iranian President Hassan
Rouhani helped to lift prices only briefly.
    Trump, in a tweet, told Rouhani on Sunday to "NEVER, EVER
THREATEN THE UNITED STATES AGAIN" after Rouhani said that
hostile U.S. policies towards Tehran could lead to "the mother
of all wars".             
    Geopolitical instability often boosts gold, traditionally
seen as a safe place to invest in times of uncertainty. 
    Gold's plunge in recent months has led banks and brokerages
to downgrade their average gold price forecasts for this year
and next, according to a Reuters poll published on Monday.
            
    But respondents still expect the metal to bounce back
towards $1,300 an ounce. 
    One potential positive is a swing in speculative positioning
that has seen funds' net short on the Comex exchange grow to its
largest since January 2016.                           
    "Such extreme positioning has frequently been an indicator
of a pronounced countermovement in the near future," Commerzbank
analysts wrote. 
    Gold is also cushioned by technical support around
$1,200-$1,220, including its July 2017 low of $1,204.90, the 50
percent Fibonacci retracement of the 2016 rally and the
psychologically significant level of $1,200.
    "I doubt if the dollar will be able to hold onto its gains
following last week's price action, so I am expecting gold to at
least go a little higher this week with resistance coming in at
$1,236 being our short-term bullish objective," said Fawad
Razaqzada, Forex.com market analyst.
    Silver        was down 0.85 percent at $15.34 an ounce after
last week's drop to its lowest since July last year. Respondents
to the Reuters poll forecast that silver would rebound and
average $16.70 this year.             
    Platinum        was little changed at $826.50 an ounce after
last week touching its lowest since 2008, while palladium       
rose from last week's one-year low and was up 2.2 percent at
$913.5.
    Prices of both metals are likely to recover from the current
levels, with platinum expected to average $922 an ounce this
year and palladium to average $1,000, a Reuters poll found.
            

 (Additiongal reporting by Renita D. Young in New York Karen
Rodrigues in Bengaluru
Editing by Dale Hudson, David Goodman and Frances Kerry)
  
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