February 15, 2018 / 11:30 AM / 3 months ago

PRECIOUS-Gold edges higher as dollar hits two-week low

    * Gold has gained almost 4 pct since Feb. 8
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl
    * GRAPHIC-U.S. Treasury debt issuance: tmsnrt.rs/2EtPxdf

 (Recasts throughout; updates prices, headline; adds comment,
NEW YORK to dateline)
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, Feb 15 (Reuters) - Gold was on track for
its fourth straight session of gains on Thursday as the U.S.
dollar slid to its lowest in two weeks on concerns about the
impact of high U.S debt levels and tax cuts.
    Spot gold        added 0.2 percent at $1,352.81 an ounce by
2:04 p.m. EST (1904 GMT), after earlier hitting $1,357.08, its
highest since Jan. 25. It had risen 1.6 percent on Wednesday,
its biggest one-day gain since May 2017.
    U.S. gold futures         for April delivery settled down
$2.70, or 0.2 percent, at $1,355.30 per ounce. 
    "The debt level will be a major cause of inflation, because
it will signal higher interest rates," said George Gero,
managing director of RBC Wealth Management. 
    "The higher rates will come as a product of inflationary
pressures from the $1.5 trillion infrastructure rebuilding and
the rebuilding of Florida, Texas, California, Puerto Rico," he
said, referring to weather-related disasters last year.
    The U.S. dollar index        was down against a basket of
currencies, earlier hitting a near two-week low of 88.585.
    A recovery in broader risk sentiment was also seen weighing
on the dollar, which gained during this month's market turmoil.
      
    The greenback has been hit by several setbacks this year,
ranging from the possibility Washington might pursue a weak
dollar strategy to the perceived erosion of its yield advantage
as other countries end their easier monetary policy.
    Concerns about the growing U.S. fiscal deficit have also
weighed on the currency.    
    Inflation fears boost gold, which is seen as a safe haven
against rising prices. But expectations that the U.S. Federal
Reserve will raise interest rates to fight inflation make gold
less attractive since it is not interest-yielding.
    "This latest debt comes at a time when people actually think
the economy is rebounding and it could be even more
inflationary," said Chris Gaffney, president of world markets at
EverBank. 
    BMI Research was neutral on gold prices because of mixed
signals from wider financial markets, it said in its gold
outlook.
    "Key resistance for prices comes in around the 2016 high of
$1,375 per ounce and we would have to see this level decisively
broken before calling for significant near-term gains," the
research group said in a note.
    Meanwhile, silver        dropped 0.2 percent at $16.83 an
ounce after hitting a more than one-week high of $16.98.
    Palladium        increased 1.2 percent at $1,012.50 per
ounce after reaching a one-week peak of $1,020.90. 
    Platinum        decreased 0.06 percent at $995.99 an ounce,
after hitting $1,007.10, its highest in two weeks.

    
 (Additional reporting by Eileen Soreng in Bengaluru; Editing by
Edmund Blair, David Evans and Frances Kerry)
  
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