May 15, 2018 / 10:12 AM / in 2 months

PRECIOUS-Gold hits fresh 2018 low as rising yields lift dollar

    * Strong U.S. bond yields underpin dollar
    * SPDR Gold holdings down 0.17 percent on Monday
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Releads, updates prices)
    By Maytaal Angel
    LONDON, May 15 (Reuters) - Gold slid more than 1 percent on
Tuesday, falling for a third day to hit its lowest this year as
a rise in U.S. borrowing costs pushed up the dollar and
overshadowed the impact of strife in Gaza.
    Downward momentum in gold picked up after the metal broke
below support at its 200-day moving average at $1,306 an ounce.
That had firmly underpinned prices earlier this month. 
    Spot gold        was down 1.2 percent to $1,207.06 an ounce
by 1304 GMT, having earlier hit its lowest since late December
at $1,296.31. U.S. gold futures         for June delivery were
down 1.6 percent to $1,296.90 an ounce.
    Israeli troops shot dead dozens of Palestinian protesters on
the Gaza border on Monday when the high-profile opening of the
U.S. embassy to Israel in Jerusalem by the Trump administration
raised tension to boiling point.              
    But gold investors were fixated on the dollar, which rose
versus a currency basket as 10-year U.S. bond yields shot above
3 percent, sending borrowing costs higher in a number of other
countries.
    "The market is getting increasingly disappointed about
(gold's) inability to react to those (geopolitical) drivers,"
said Ole Hansen, head of commodity strategy at Saxo Bank.
    "We're up against bond yields, the dollar and the fact that
rising oil prices have at this stage accelerated expectations
for rate hikes in the United States, due to the risk of
inflation."
    A Federal Reserve official this week backed the case for
further interest rate hikes in the United States, saying
inflation had not yet reached the U.S. central bank's 2 percent
goal in a sustained way.             
    Higher U.S. interest rates tend to boost the dollar and push
up bond yields, making greenback-denominated gold more expensive
for holders of other currencies and denting the appeal of
non-yielding assets such as gold.
    "The market's been waiting for the next rate hike by the Fed
... and I think gold prices are going to remain under pressure
till we get through that hike," ANZ analyst Daniel Hynes said in
a note.
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.17 percent to 856.17
tonnes on Monday.             
    Silver        was down 1.5 percent at $16.25 an ounce,
having hit its lowest in nearly two weeks in earlier trade at
$16.22 an ounce. 
    Platinum        was down 0.9 percent at $896.49 per ounce,
while palladium        was 3 percent lower at $965.25 an ounce
having broken below support at its 200-day moving average,
currently at $988 an ounce. 
    Britain's Competition and Markets Authority said on Tuesday
it would examine whether a takeover of miner Lonmin        
         by South Africa's Sibanye-Stillwater          would
lessen competition.             

 (Additional reporting by Jan Harvey in London and Apeksha Nair
in Bengaluru
Editing by Dale Hudson/Keith Weir)
  
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