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PRECIOUS-Gold hits 1-month low as dollar gains on Fed hike view

Published 28/03/2016, 06:14 pm
© Reuters.  PRECIOUS-Gold hits 1-month low as dollar gains on Fed hike view
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* Expectations of U.S. rate hike, possibly as soon as April

* Gold fell 3 percent last week, the most since November

* Coming Up: U.S. pending home sales; 1400 GMT (Updates prices)

By Manolo Serapio Jr

MANILA, March 28 (Reuters) - Gold dropped to its weakest in a month on Monday, pressured by a firmer dollar following hawkish comments from U.S. Federal Reserve officials that signalled the next U.S. interest rate increase could come as soon as next month.

It marked further losses for bullion which fell the most since November last week as the dollar gained traction on prospects of higher U.S. interest rates in the near term.

All eyes will be on Fed Chair Janet Yellen who speaks on the U.S. economy and monetary policy on Tuesday that may give more clues on how many rate hikes policymakers are looking at and the timing.

St. Louis Fed President James Bullard was the latest to add his voice to policymakers supporting a rate hike, possibly as soon as in the next policy meeting in April.

But Bullard also said he was undecided on whether to push for an April rate increase in part because the U.S. central bank will have seen little more economic data in the interim. we have stated that Fed tightening may not be as negative for gold as in previous tightening cycles, an April rate rise would likely knock gold lower near term," HSBC analyst James Steel wrote in a report.

Steel, however, said gold's retreat may be temporary if the Fed only lifts interest rates twice this year which "should allow the market to hold above $1,200 support".

Spot gold XAU= was down 0.2 percent at $1,214.16 an ounce by 0650 GMT. It touched a session-low of $1,208.15, its cheapest since Feb. 23. The metal lost 3 percent last week.

The dollar hit a 1-1/2-week high versus a basket of currencies .DXY , extending last week's gains as expectations for an April U.S. rate hike strengthened.

Trading was likely to remain slow on Monday with key markets, including London, still shut for Easter holidays.

U.S. gold for April delivery GCcv1 slipped 0.6 percent to $1,214.50 an ounce.

Inflows into gold exchange-traded funds (ETF) continued, however, suggesting confidence in bullion remained.

SPDR Gold Trust GLD , the world's largest gold-backed ETF, said its holdings rose to 26.48 million ounces on Thursday, the highest since December 2013. HLDSPDRGT=XAU

Russia and Kazakhstan extended their gold buying spree in February by adding to their bullion reserves, while Malaysia and Turkey cut their bullion holdings, data from the International Monetary Fund showed on Friday. silver XAG= gained 0.3 percent to $15.19 an ounce and palladium XPD= rose 0.7 percent to $578. Platinum XPT= edged up 0.6 percent to $950.10 an ounce.

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