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PRECIOUS-Gold at lowest in nearly six years on stronger dollar

Published 26/11/2015, 10:13 pm
© Reuters.  PRECIOUS-Gold at lowest in nearly six years on stronger dollar
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* Dollar at 8-month high after data, ECB easing prospects

* U.S. markets shut for Thanksgiving holiday

* China's Oct gold imports from HK slip to 71.58 tonnes (Updates throughout, changes dateline from SINGAPORE)

By Clara Denina

LONDON, Nov 26 (Reuters) - Gold was trading near its lowest in nearly six years on Thursday, as the dollar held at multi-month highs after U.S. economic data reinforced expectations of an interest rate rise this year.

The U.S. currency was also supported against the euro, weighing on dollar-denominated gold, as European Central Bank officials told Reuters they were considering options such as whether to stagger charges on banks hoarding cash or to buy more debt. The ECB meets next week.

Spot gold was unchanged on the day at $1,070.73 an ounce by 1103 GMT, not far off $1,064.95 hit last week, the lowest since February 2010.

Liquidity is likely to thin out on Thursday as the U.S. markets are shut for the Thanksgiving holiday.

"The sense in the market is that the dollar will continue to rally due to the prospect for QE in Europe and the hike in the U.S.," Saxo Bank head of commodity strategy Ole Hansen said.

"The focus is back to the negative correlation to a stronger dollar and that's keeping gold under pressure."

The dollar .DXY was up 0.1 percent against a basket of major currencies, trading close to an eight-month high reached in the previous session.

"We are keeping an eye on the dollar as a possible catalyst (for gold)," ScotiaMocatta said in a note.

"The dollar index is within reach of the multi-year high of 100.39. A break of this level would put downside pressure on gold with a break of $1,066 yielding ... $1,045," it said.

Data on Wednesday showed U.S. manufacturing output rose well above economists' expectations in October, while business spending plans surged.

Gold had seen some safe-haven bids earlier in the week after Turkey downed a Russian fighter jet, stoking tensions between the two countries, but have faded since as investors' focus returned to a U.S. rate rise.

In the physical markets, buying interest picked up as gold prices stayed near multi-year lows.

Premiums on the Shanghai Gold Exchange, a proxy for demand in top consumer China, were trading at a healthy $5-$6 an ounce on Thursday, versus $3-$4 in the beginning of the month.

China's net gold imports from main conduit Hong Kong fell in October from a 10-month high reached in the previous month, data showed on Thursday.

Third-quarter gold buying in India, the world's biggest consumer, is likely to fall to the lowest level in eight years, hurt by poor investment demand and back-to-back droughts that have slashed earnings for millions of farmers.

Silver XAG= was up 0.4 percent at $14.20 an ounce.

Platinum XPT= rose 1.2 percent to $849 an ounce, after hitting a fresh seven-year low in the previous session, while palladium XPD= fell 1 percent to $548.75.

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