February 20, 2018 / 11:36 AM / 3 months ago

PRECIOUS-Gold falls for third session ahead of big U.S. debt auction

    * U.S. launches auctions for $258 billion of debt
    * Gold expected to fall to $1,326/oz -analyst

 (Recasts throughout, updates prices, adds comment, adds NEW
YORK to dateline)
    By Renita D. Young and Eric Onstad
    NEW YORK/LONDON, Feb 20 (Reuters) - Gold prices were
pressured by a stronger U.S. dollar and rising interest rates on
Tuesday, dropping for a third session, but were underpinned by
political worries and uncertainty about this week's huge U.S.
bond auctions.
    The dollar continued its rebound from three-year lows as
investors shrugged off worries about the U.S. budget deficit and
focused on large U.S. government debt auctions this week.       
    "Gold is under pressure form the dollar index rallying
significantly and interest rates continuing to rise," said
Phillip Streible, senior commodities strategist at RJO Futures.
    "I wouldn't be surprised to see gold hold the 50-day moving
average at $1,316."
    Spot gold        shed 1.3 percent at $1,328.71 an ounce by
1:35 p.m. EST (1835 GMT), dropping to $1,328.26, its lowest
since Feb. 14.
    U.S. gold futures         futures for April delivery settled
down $25, or 1.8 percent, at $1,331.20 per ounce. 
    The U.S. Treasury Department Tuesday sold record amounts of
three-month and six-month bills at the highest interest rates
for these maturities at auctions in more than nine years,
Treasury data showed.                                       
    The U.S. Treasury will sell more than $250 billion worth of
new debt this week, which analysts said would be a key gauge of
international investors' appetite for U.S. assets. 
    The dollar has sold off in recent months on worries that the
Trump administration's recently passed tax cuts and plans for
large government spending would widen the deficit.
    Spot gold is expected to fall to the next support level at
$1,326, according to Reuters technical analyst Wang Tao.
        
    Geopolitical uncertainty, ranging from disunity at the
recent Munich security conference to threatened U.S. trade
sanctions, may increase safe-haven demand for gold, said Ole
Hansen, head of commodity strategy at Saxo Bank in Copenhagen. 
    Gold investors are also anticipating the release on
Wednesday of the U.S. Federal Reserve's January policy meeting
minutes and the Thursday release of the European Central Bank's
latest policy meeting minutes.
    Meanwhile, silver        slipped 1.2 percent to $16.46 an
ounce, hitting $16.44, its lowest since Feb. 14.
    Palladium        added 0.1 percent at $1,033.99 an ounce,
after rising to the highest since Feb. 2 at $1,050 in the
previous session. 
    A major low was achieved earlier this month when palladium
hit $957.75, Stéphanie Aymes, head of technical analysis at
Societe Generale, said in a note.
    "A break past $1,055 will prompt accrued positive signals
towards $1,071/78...and more importantly towards the channel
upper band at $1,145/55."   
    Platinum        dropped 0.2 percent to $1,000.20 an ounce
after rising to a three-week high of $1,013.60 on Monday.

 (Reporting by Renita D. Young; Editing by Bernadette Baum)
  
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