March 14, 2018 / 11:47 AM / 10 months ago

PRECIOUS-Gold edges lower on political drama and firming dollar

    * Trump fires Tillerson, sparking fears of U.S.
    * Dollar recovers after easing on Tillerson news
    * GRAPHIC-2018 asset returns:

 (Updates prices, headline; adds comment, NEW YORK to dateline,
additional byline)
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, March 14 (Reuters) - Gold prices edged
lower on Wednesday, pressured by a recovering dollar and an
expectation of higher interest rates, but supported by
safe-haven buying after the sudden dismissal of U.S. Secretary
of State Rex Tillerson.
    Spot gold        declined 0.1 percent at $1,324.40 per ounce
by 1:36 p.m. EST (1736 GMT), earlier touching $1,330.02, its
highest since March 7.
    U.S. gold futures         for April delivery settled down
$1.50, 0.1 percent, at $1,325.60 per ounce. 
    "The political uncertainty has limited the downside price
risk for gold in a raising rates environment, as opposed to
driving prices significantly higher," said Suki Cooper, Standard
Chartered Bank precious metals analyst.
    Rising interest rates tend to make gold less attractive
since it does not bear interest.
    Technical Fibonacci support for gold was at $1,317.20 an
ounce with resistance at $1,336.30, said analysts at
ScotiaMocatta in a note.
    Gold is seen as a safe haven during times of political and
financial uncertainty and benefited on Tuesday when President
Donald Trump fired Tillerson after a series of public rifts over
policy, replacing him with loyalist CIA Director Mike Pompeo.
    Investors have switched to become more risk-averse following
the unexpected news of Tillerson's dismissal and the appointment
of Pompeo, said OCBC analyst Barnabas Gan.
    The U.S. dollar inched higher against major currencies,
recovering from a decline caused by the dismissal of Tillerson.
    A stronger dollar makes commodities priced in the greenback
more expensive for holders of other currencies.
    "Pompeo is a supporter of Trump's trade policy and could
help advance his agenda of imposing it on U.S. trading partners
... all this uncertainty and risk aversion leaves gold as a safe
haven option," Gan added.
    Supporting gold was news that Trump was seeking to impose
tariffs on up to $60 billion of Chinese imports and will target
the technology and telecommunications sectors.             
    Meanwhile, data on Tuesday showed U.S. consumer prices
cooled in February amid a decline in gasoline prices and a
moderation in the cost of rental accommodation, the latest
indication that an anticipated pick-up in inflation probably
will be gradual.             
    Inflation is a key economic factor the U.S. central bank
considers when deciding monetary policy. A strong U.S. inflation
reading could raise expectations for future interest rate
increases, pressuring on non-yielding bullion.
    In other precious metals, silver        was barely changed
at $16.53 per ounce.
    Platinum        was flat at $960.60 an ounce after touching
$973.20, a one-week high, and palladium        dropped 0.2
percent to $988.70, reaching a near two-week high earlier at

 (Additional reporting by Peter Hobson in London and Nithin
Prasad in Bengaluru
Editing by David Evans and Tom Brown)
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