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PRECIOUS-Gold prices touch one-week high on softer U.S. dollar

@djmckennon

Trade war worries drag world stocks lower, yuan steadies

* Fed June minutes due Thursday, payrolls due Friday

(Updates throughout)

By Marcy Nicholson and Maytaal Angel

CALGARY/LONDON, July 4 (Reuters) – Gold rose to a one-week

high on Wednesday, extending the prior session’s rebound from a

seven-month low, helped by a softer U.S. dollar and smoldering

trade policy tensions, though the prospect of the Federal

Reserve raising interest rates further may limit gains.

The U.S. dollar index fell against a basket of major

currencies, while the Chinese yuan rose for a second day

with central bank support, after seeing an 11-month low this

week.

A weaker U.S. dollar makes dollar-priced gold cheaper for

non-U.S. investors.

“Gold has been trending lower for several weeks and this

being (U.S) non-farm payrolls (week) the dollar is likely to

remain in range, so people are taking profit on dollar and gold

positions,” said Fawad Razaqzada, an analyst at FOREX.com.

“I’m still not convinced we’ve seen the lows so long as gold

remains below $1,300. The dollar is on an upwards trajectory. I

don’t think (looming U.S. interest rate) hikes are fully priced

into the dollar or gold.”

Spot gold was up 0.3 percent at $1,256.20 an ounce by

1:59 p.m. EDT (17:59 GMT) after touching $1,261.10, a one-week

high. The yellow metal has gained over $20 from Tuesday’s low of

$1,237.32 an ounce, its weakest since Dec. 12.

U.S. gold futures for August delivery rose 0.4

percent to $1,258.10 in a shortened session and will not have a

settlement price due to the U.S. Independence Day holiday on

Wednesday.

Investors are now looking to minutes of the June U.S.

Federal Reserve meeting due for publication on Thursday and the

U.S. non-farm payrolls and unemployment data on Friday for

further cues on monetary policy. Markets are pricing in two more

Fed interest rate hikes for 2018.

World stocks were flat amid growing anxiety ahead of

Washington’s end of week deadline to impose tariffs on Chinese

imports.

“Since the trade wars have been doing the rounds, if

anything we’ve seen gold come lower. But if it continues to

escalate gold could go only one way and that’s higher,” a

Sydney-based trader said.

China is putting pressure on the European Union to issue a

strong joint statement against U.S. President Donald Trump’s

trade policies at a summit later this month but is facing

resistance, European officials said.

Gold is often regarded as a safe haven during times of

political and financial uncertainty.

Silver was 0.1 percent higher at $16.03 an ounce and

palladium gained 0.7 percent to $946.

Platinum was flat at $837 an ounce. The metal fell on

Tuesday to the lowest since December 2008 at $793.

(Additional reporting by Karen Rodrigues in Bengaluru; editing

by Elaine Hardcastle and Emelia Sithole-Matarise)

Our Standards:The Thomson Reuters Trust Principles.

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