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PRECIOUS-Gold holds gains as dollar retreats

Published 16/11/2016, 05:28 pm
© Reuters. PRECIOUS-Gold holds gains as dollar retreats
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* Spot gold may test resistance at $1,235/oz- technicals

* Dollar index slips, but hovers near its highest since December

* SPDR Gold holdings down 0.16 percent (Adds comments, updates prices)

By Apeksha Nair

Nov 16 (Reuters) - Gold prices on Wednesday held gains made in the previous session as the U.S. dollar weakened, but lacked impetus to push higher on increased odds of an interest rate hike by the Federal Reserve.

Spot gold XAU= was up 0.14 percent at $1,229.36 an ounce at 0610 GMT, after rising 0.67 percent in the previous session.

U.S. gold futures GCcv1 rose 0.41 percent to $1,229.50.

"At this moment there is some kind of rebound but $1,230 should be the immediate resistance level that it should not cross with a very high momentum," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

"$1,215 to $1,250 should be the trading range just to allow some time for people to think and reflect on the possibilities of policy options for the President-elect."

Trump's election to the U.S. presidency sent bond yields surging to 2016 highs this week, pushing the U.S. dollar to an 11-month peak against a basket of major currencies on Tuesday, as investors bet his administration's policies would stoke inflation. US/ USD/

On Wednesday, the dollar index .DXY , which measures the greenback against a basket of major currencies, slipped back 0.26 percent at 99.965.

"A slightly weaker U.S. dollar also helped improve investor sentiment," ANZ analysts said in a note.

However, the dollar still held near its 11-month high hit, though, after upbeat U.S. data gave the greenback fresh impetus. USD/

Stronger-than-expected U.S. retail sales data in October pointed to sustained economic strength that could allow the Federal Reserve to raise interest rates next month. Governor Daniel Tarullo on Tuesday said Trump's election already may be pushing up interest rates and tightening financial markets, something the Fed will have to monitor as it decides how quickly to tighten monetary policy. Fed officials' recent comments, talk of a rate rise will hardly inspire gold to go higher," said James Steel, chief metals analyst for HSBC Securities.

Gold is highly sensitive to interest rates.

Spot gold XAU= may test a resistance at $1,235 per ounce, a break above which could lead to a further gain to the next resistance at $1,249, according to Reuters technical analyst Wang Tao. Gold Trust GLD , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.16 percent to 927.45 tonnes on Tuesday from 928.93 tonnes on Monday. GOL/ETF

Among other precious metals, silver XAG= was up 0.4 percent at $17.14 an ounce, and platinum XPT= rose 0.27 percent to $937.80.

Palladium XPD= was down 0.3 percent at $703.80, after touching its best since Oct. 4 at $711.70 earlier in the day.

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