January 23, 2018 / 11:50 AM / a month ago

PRECIOUS-Gold rises as dollar dips, stocks jump

    * Dollar index falls to fresh three-year low
    * Platinum off highest in more than four months

 (Recasts; updates prices, adds comment, NEW YORK to dateline)
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, Jan 23 (Reuters) - Gold prices rose on
Tuesday as the U.S. dollar fell to fresh three-year lows, but an
end to uncertainty created by a three-day U.S. government
shutdown capped gains.
    Spot gold        was up 0.3 percent at $1,337.36 an ounce at
1:38 p.m. EST (1838 GMT) after touching a one-week high of
$1,339.09, while U.S. gold futures         for February delivery
settled up $4.80, or 0.4 percent, at $1,336.70 per ounce.
   "The continuation of weakness in the dollar is prompting
support in commodities across the board," said David Meger,
director of metals trading at High Ridge Futures in Chicago.
    The dollar index        fell to a fresh three-year low
against a basket of six currencies, after data showed euro zone
consumer confidence jumped much more than expected in January,
underlining the strong momentum in its economy.             
    A weaker greenback makes dollar-denominated assets such as
gold cheaper for holders of other currencies.
    Gold was virtually unaffected by the shutdown in the
previous session. Bullion traded in a tight range after the U.S.
Senate voted to pass a temporary spending plan through Feb. 8 to
end the government shutdown.             
    Equity markets have since gained, however some market
participants are pacing for a correction, said Josh Graves,
senior commodities strategist at RJO Futures in Chicago.
           
    "Equities are getting overdone, so you're seeing more guys
positioning for at least a short-term correction," he said.
    Markets are also anticipating an expected U.S. interest rate
increase in March, which could affect gold.
    "The anticipation of a March hike could act as additional
weight for gold, although given this is now largely anticipated,
the downside risks should be limited and gold's reaction
function is likely to be asymmetric," UBS said in a note.
     U.S. benchmark 10-year Treasury note yields fell to a
five-day low, while 30-year bond yields sank to a one-week low.
Declining yields typically make gold more attractive to non-U.S.
investors.      
    The U.S. economy is likely to grow in 2018 at its fastest
pace in three years, fueled by the biggest tax overhaul since
the 1980s, according to a Reuters poll of more than 100
economists.             
    Faster economic growth in the world's largest economy would
increase the likelihood of interest rate rises and dent the
appeal of non-interest yielding bullion.
    Among other precious metals, platinum        was 0.8 percent
lower at $1,002.80 an ounce, down from a more than four-month
high touched in the previous session. 
    Silver        was down 0.5 percent at $16.92 an ounce after
touching a $3-1/2-week low of $16.73.
    Palladium        was 0.9 percent lower at $1,087.97 an
ounce.

 (Additional reporting by Peter Hobson in London and Nithin
Prasad and Nallur Sethuraman in Bengaluru; editing by Mark
Heinrich and Tom Brown)
  
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