February 20, 2018 / 4:20 AM / 6 months ago

PRECIOUS-Gold prices dip as dollar bounces off Dec 2014-lows

    * Spot gold has good chance of breaking down to $1,326/oz
-Technicals
    * U.S. gold futures down 1 pct, biggest fall since Nov. 2017

 (Updates prices)
    By Eileen Soreng
    Feb 20 (Reuters) - Gold prices fell for a third straight
session on Tuesday as the dollar rebounded from over three-year
lows hit last week, while investors waited for minutes of the
latest Federal Reserve meeting for clues on the outlook for U.S.
interest rates.
    Spot gold        was down 0.6 percent, its biggest one-day
percentage fall in two weeks, at $1,339.09 an ounce, as of 0832
GMT. 
    U.S. gold futures         were down 1.2 percent at $1,340.4
per ounce, posting its biggest one-day percentage fall since
Nov. 2017. 
    The dollar index       , which measures the greenback
against a basket of six currencies, was up 0.5 percent at
89.544. It fell to 88.253 last week, the lowest since December
2014.
    The U.S. currency showed signs of a bounce-back as some
investors bought in after last week's declines, though the gains
on Tuesday were capped by growing concerns that a rising fiscal
deficit in the United States could disrupt the economy.       
    The minutes of the January Fed meeting will provide key
guidance for the dollar and gold, said Helen Lau, analyst at
Argonaut Securities.
    "The key driver will be interest rate hikes ... How fast and
how many times they can raise," Lau added. 
    The U.S. Fed will release the minutes of its Jan. 30 to 31
policy meeting on Wednesday. The meeting was held during last
month's drop in equity markets and investors are interested in
the Fed's response to the market gyrations as well as the rate
outlook.
    Higher U.S. interest rates would limit demand for
non-interest bearing gold.  
    Meanwhile, Asian stocks slipped on Tuesday, their recent
recovery stalling after European equities broke a winning
streak.            
    Analysts said despite the rate hike outlook, investors will
still be weary of rising inflation in the United States.
    Gold prices rose 2.4 percent last week in its best weekly
gain in more than five months, as investors bought gold on fears
of rising inflation in the United States.                          
    Spot gold is expected to test a support at $1,338 per ounce,
with a good chance of breaking below this level and falling more
to the next support at $1,326, according to Reuters technical
analyst Wang Tao.         
    Among other precious metals, silver        slipped 1.1
percent to $16.47 an ounce.
    Palladium        was 0.6 percent lower at $1,027.50, after
rising to the highest since Feb. 2 at $1,050 in the previous
session. 
    Platinum        dipped 0.1 percent to $1,001.40, after
rising to a three-week high of $1,013.60 on Monday.

 (Reporting by Eileen Soreng in Bengaluru, Editing by Christian
Schmollinger and Sherry Jacob-Phillips)
  
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