October 23, 2017 / 3:57 AM / a month ago

PRECIOUS-Gold hits 2-week low as dollar rallies vs yen

    * Spot gold may seek support in $1,271-$1,273/oz range -
techs
    * Specs cut net longs in gold for fifth straight week
    * Dollar index up, supported by U.S. bond yields, tax
reforms

 (Adds detail, third bullet; updates prices)
    By Apeksha Nair
    Oct 23 (Reuters) - Gold hit its lowest in over two weeks on
Monday, as the dollar climbed to a three-month high versus the
yen after Japan's ruling bloc scored a big win in Sunday's
election, leaving the door open to ultra-loose monetary policy
for longer.
    Spot gold        was down 0.4 percent at $1,275.81 an ounce
by 0637 GMT, after hitting its lowest since Oct. 6 at $1,273.80
earlier in the session.
    U.S. gold futures         for December delivery fell 0.3
percent to $1,277.30 per ounce.
    "This move is just really because of the dollar strength,"
said Yuichi Ikemizu at ICBC Standard Bank in Tokyo.
    "There's no news on North Korea this past week or so. If
some news comes out, gold might be supported but at the moment
people are just watching the dollar."  
    Geopolitical risks can boost demand for safe-haven assets
such as gold and the Japanese yen. 
    Japanese Prime Minister Shinzo Abe's Liberal Democratic
Party-led (LDP) coalition won a combined 312 seats, keeping its
two-thirds "super majority" in the 465-member lower house, local
media said.             
    Abe's victory eased fears that the economic steps
implemented under his leadership - such as the Bank of Japan's
super easy monetary policy - would be disrupted and halt the
yen's depreciation against the dollar.
    The dollar also rose against a basket of major currencies
      , supported by a rise in U.S. Treasury yields and progress
in tax reforms.                           
    Meanwhile, U.S. President Donald Trump is considering
nominating Federal Reserve Governor Jerome Powell and Stanford
University economist John Taylor for the central bank's top two
jobs.             
    Powell is considered less hawkish than Taylor who is seen
advocating higher interest rates. 
    Current Chair Janet Yellen, whose term expires in February,
on Friday said the Fed's tools must remain part of its arsenal
as long as the economy remains stuck in a low interest-rate
economy.             
    Higher U.S. interest rates tend to boost the dollar and push
bond yields up, putting pressure on the greenback-denominated,
non-yielding gold.
    Spot gold may seek support in a narrow zone of $1,271-$1,273
per ounce before bouncing towards $1,283, Reuters technicals
analyst Wang Tao said.              
    Hedge funds and money managers reduced their net long
position in COMEX gold contracts for the fifth straight week, in
the week to Oct. 17, U.S. data showed on Friday.        
    In other precious metals, silver        was down 0.2 percent
at $16.97 an ounce.
    Platinum        fell 0.5 percent to $916 an ounce and
palladium        dropped 0.4 percent to $971.20.

 (Reporting by Apeksha Nair in Bengaluru; Editing by Subhranshu
Sahu)
  

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