Gold recovers after strong dollar drives it to one-week low

Gold recovers after strong dollar drives it to one-week low
* Platinum, palladium hit more than one-week low

(Recasts, adds comment, detail; updates prices; changes
By Maytaal Angel
LONDON, Oct 19 (Reuters) - Gold prices recovered on Thursday
after dropping overnight to their lowest in more than a week,
driven down by a strong dollar, which hurt demand for
dollar-priced gold, and by soaring stock markets.
The dollar index fell versus a basket of major
currencies, after gaining in tandem with 10-year U.S. Treasury
yields . They rose on expectations U.S. interest
rates will be soon be raised and on investor risk appetite.

Global stocks, which often trade counter to gold, set record
highs before stalling in Europe on concern over political
turmoil in Spain, the eurozone's fourth-largest economy.

"There's technical reasons why we've stabilised, (plus)
stocks have come off, (but overall) people are not finding much
value investing in gold at the moment," said Fawad Razaqzada, an
analyst at
"The lack of safe-haven demand combined with expectations of
higher interest rates is weighing on gold. If gold remains below
$1,300, there's a risk of a deeper correction in the coming days
or weeks."
Spot gold was up 0.4 percent to $1,286.33 an ounce at
1232 GMT after earlier hitting its lowest since Oct. 9 at
$1,276.22. Gold has lost 6 percent since Sept. 8.
U.S. gold futures for December delivery rose 0.4
percent to $1,288.20.
The current term of Federal Reserve Chair Janet Yellen ends
in February, and investors waiting to see who U.S. President
Donald Trump will pick as her replacement. The White House said
a decision would be announced in "coming days"
"Depending on how the dollar goes, we might look at
$1,250-60 as the next stop for gold to trade down. We don't see
an immediate upward catalyst for gold except for North Korea,"
said Richard Xu, a fund manager at China's biggest gold
exchange-traded fund, HuaAn Gold.
Higher interest rates tend to boost the dollar and push up
bond yields, putting pressure on gold by increasing the
opportunity cost of holding non-yielding bullion.
U.S. interest rates futures saw modest losses on Wednesday
after the release of the Fed's Beige Book, but traders still saw
an 80 percent chance the Fed will raise rates in December.

"Looks like fundamentally the (U.S.) economy is doing pretty
well, so that will also put downward pressure on gold," Xu said.
Silver rose 0.4 percent to $17 an ounce, platinum
rose 0.8 percent to $925.20 and palladium climbed
0.2 percent to $954.70.
Platinum and palladium hit one-week lows earlier.
Palladium rallied to a 16-year high this week and may
spike further on rising auto sales in China and as consumers
replace vehicles damaged by hurricanes in the United States.

(Additional reporting by Apeksha Nair in Bengaluru; Editing by
Larry King)

First Published: 2017-10-19 03:06:56
Updated 2017-10-19 14:54:42

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