January 30, 2018 / 11:51 AM / 3 months ago

PRECIOUS-Gold off highs as market braces for Trump speech, Fed meeting

    * Investors await Fed meeting for interest rate cues
    * Platinum's lengthy bear run shows signs of turning

 (Recasts throughout; updates prices, adds comment, NEW YORK to
dateline)
    By Renita D. Young and Maytaal Angel
    NEW YORK/LONDON, Jan 30 (Reuters) - Gold slipped back to a
one-week low on Tuesday as markets braced for U.S. President
Donald Trump's annual State of the Union address and news on
U.S. monetary policy.
    The speech and policy news will come amid positive consumer
data and continuing fallout from a Republican memo alleging
anti-Trump bias.             
    "A lot of this is repositioning for the State of the Union
coming on tonight," said Josh Graves, senior commodities
strategist at RJO Futures.             
    "And the talk of this memo that has damaging information in
it has the market a little spooked."
    Spot gold        was down 0.22 percent at $1,336.99 an ounce
by 1:49 p.m. EST (1849 GMT), earlier touching a one-week low of
$1,334.10. 
    U.S. gold futures         for February delivery settled down
$4.90, or 0.4 percent, at $1,335.40 per ounce. 
    Markets are also bracing for potentially hawkish language
from the U.S. Federal Reserve, which ends its two-day policy
meeting on Wednesday amid signs that U.S. economic growth is
picking up steam.
    "On Friday U.S. jobs data should confirm the strong picture
for the U.S. economy, which speaks in favor of rate rises and a
strong dollar, so in the short term gold is under pressure,"
said Mitsubishi analyst Jonathan Butler.
    He added, however, that the dollar is still "very much in a
long-term downtrend."
    Investors will be closely watching Trump's annual State of
the Union speech for comments on the dollar.
    U.S. Treasury Secretary Steven Mnuchin gave dollar bears a
boost last week with a tacit endorsement of a weak U.S.
currency, though Trump later tried to row back from those
comments.
    Gold hovered near its one-week low despite world equity
markets taking their biggest two-day dive in six months, while
the dollar index slipped back after climbing overnight.
                  
    Rising bond yields and a sell-off in healthcare shares sent
the U.S. stock market sliding, with the Dow Jones Industrial
Average's 352-point tumble its steepest in eight months.
            
    Higher bond yields make gold a less attractive investment
because it pays no interest.
    In other precious metals, silver        dropped 0.3 percent
at $17.11 an ounce after touching a six-day low.
    Palladium        was down 3.1 percent at $1,052.20 an ounce
after hitting a five-week low at $1,047.00. Platinum        was
down 0.9 percent at $995 an ounce after touching $987.49, a
one-week low.
     A surge in platinum prices this month has helped the metal
used in autocatalysts to break above a downward trendline in
place since early 2013.             

 (Additional reporting by Nallur Sethuraman; Editing by Susan
Fenton and David Goodman)
  
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