January 10, 2018 / 3:33 AM / 2 months ago

PRECIOUS-Gold inches down on higher U.S. Treasury yields

    * Wary about going long on gold at these levels - analyst
    * SPDR Gold holdings fall 0.35 pct on Tuesday
    * Palladium off life-time highs hit on Tuesday

 (Updates prices)
    By Sethuraman N R
    Jan 10 (Reuters) - Gold prices edged down on Wednesday as a
surge in U.S. treasury yields and an ongoing rally in equities
dented the precious metal's safe-haven appeal.
    Spot gold        was down 0.2 percent at $1,310.16 an ounce
by 0708 GMT. It declined 0.6 percent on Tuesday, in its biggest
one-day drop in a month.
    U.S. gold futures         were down 0.2 percent at $1,310.80
an ounce on Wednesday. 
    Benchmark U.S. Treasury yields hit a 10-month high on
Tuesday after the Bank of Japan tweaked its bond-buying
    Wall Street's major indexes extend the New Year rally to
record levels into a sixth day on Tuesday, but Asian shares
slipped on Wednesday on profit-taking.            
    "We are wary about going long on gold at these levels... The
spike in U.S. treasury yields is an obvious negative, as is the
fact that the dollar is now quite oversold against a number of
currencies," said INTL FCStone analyst Edward Meir.
    "We are particularly concerned by the latest CFTC data
showing dollar short positions at multi-year highs and so a
short-covering rally cannot be ruled out."
    A stronger greenback makes dollar-denominated gold more
expensive for holders of other currencies. 
    The dollar index, which tracks the greenback against a
basket of six major rival currencies, was steady at 92.487
      . It touched a more than one-week high at 92.640 on
    The U.S. Federal Reserve should keep interest rates low so
that wage gains accelerate and inflation rises, Minneapolis
Federal Reserve President Neel Kashkari said on Tuesday.
    Investors are betting on more U.S. interest rate hikes after
last week's payrolls data did nothing to challenge the outlook
for monetary policy tightening by the U.S. Federal Reserve.             
    Higher rates could dent demand for non-interest-paying gold.
    Spot gold may be range-bound between $1,305 and $1,313 per
ounce, as suggested by a Fibonacci retracement analysis,
according to Reuters technical analyst Wang Tao. 
    "From a technical point of view, the area $1,300 now
represents a support. If gold manages to remain above this
level, markets could see this as a signal of strength from the
buyers," said ActivTrades chief analyst Carlo Alberto de Casa.
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.35 percent to 831.91
tonnes on Tuesday from Monday, the biggest drop since Dec. 18,
    Spot palladium        fell 0.5 percent to $1,094.28 an ounce
on Wednesday, after hitting a life-time high on Tuesday at
    Silver        was down 0.1 percent at $16.93 an ounce.
Platinum        dropped 0.7 percent to $958.60 an ounce.

 (Reporting by Nallur Sethuraman in Bengaluru; editing by
Richard Pullin and Subhranshu Sahu)
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