February 13, 2018 / 3:41 AM / 9 days ago

PRECIOUS-Gold gains on weaker dollar ahead of U.S. inflation data

    * U.S. inflation data due on Wednesday
    * Dollar index extends fall from prev session

 (Updates with latest prices)
    By Eileen Soreng
    Feb 13 (Reuters) - Gold prices hit a near one-week high on
Tuesday, helped by a weaker dollar and as investors awaited U.S.
inflation data for clues on the pace of interest rate hikes.
    Spot gold        was up 0.4 percent at $1,327.81 an ounce,
as of 0731 GMT. Earlier, it hit the highest since Feb. 7 at
$1,328.03. 
    On Monday, the yellow metal rose 0.5 percent, its biggest
single-day percentage gain in more than one week.
    U.S. gold futures         were up 0.3 percent at $1,330 per
ounce.
    "We suspect that gold has pretty much decoupled from
equities for much of the last week and is instead tracking the
dollar's ups and downs more closely," said INTL FCStone analyst
Edward Meir.
    The dollar index       , which tracks the greenback against
a basket of six major currencies, was last down 0.4 percent at
89.9, its biggest one-day percentage drop since Feb. 1.         
    Meanwhile, Asian stocks pulled further away from two-month
lows on Tuesday, lifted by Wall Street's extended rebound from
last week's steep fall.            
    "Gold held up better than stock markets last week...
Relative to stocks, gold looks to be good in value and continued
volatility in the equity markets might make gold more attractive
for its lower volatility," analysts at Heraeus Precious Metals
said in a note.
    "So far, gold investors have been largely unconcerned. While
demand for investment bars increased slightly, ETFs posted
outflows with total holdings falling."
    Holdings of SPDR Gold Trust      , the largest gold-backed
exchange-traded-fund (ETF), fell 2.5 percent last week, the
worst since the week ended July 30.
    Meanwhile, investors waited for U.S. January inflation data,
which is due on Wednesday. 
    Inflation expectations edged lower last month, dulling a
year-end rise, according to a survey published by the Federal
Reserve Bank of New York on Monday.             
    Inflation worries generally boost gold, which is seen as a
safe haven against rising prices. But expectations that the Fed
will raise interest rates to fight inflation make gold less
attractive because it is not interest-yielding.
    In other precious metals, silver        gained 0.4 percent
to $16.61 per ounce, platinum        rose 0.1 percent to $971.5
per ounce and palladium        dipped 0.3 percent to $981.45 per
ounce.

 (Reporting by Eileen Soreng in Bengaluru Editing by Subhranshu
Sahu and Biju Dwarakanath)
  
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