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PRECIOUS-Gold drifts lower on U.S. rate hike speculation

Published 13/09/2016, 12:36 am
PRECIOUS-Gold drifts lower on U.S. rate hike speculation
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* Speculators raise bullish stance on gold and silver

* September U.S. rate rise seen increasingly likely (Updates throughout, fresh quote)

By Zandi Shabalala

LONDON, Sept 12 (Reuters) - Gold fell on Monday as pressure from speculation over a potential increase in U.S. interest rates this month offset the metal's safe-haven appeal amid widespread weakness across other assets.

Spot gold XAU= was down almost 0.3 percent at $1,324.15 an ounce by 1400 GMT, with U.S. gold futures GCcv1 losing 0.5 percent to $1,328.

A chorus of hawkish comments from Federal Reserve officials kept expectations alive for a September rate increase despite a recent spate of disappointing economic data.

Stocks and bonds fell to levels last seen immediately after Britain's Brexit vote on concerns that global central banks' commitment to super-low interest rates and asset purchase programmes may be waning. MKTS/GLOB

After Boston Fed President Eric Rosengren spoke on Friday, the chances of a rate rise in September were seen at 30 percent, up from 24 percent before his comments. seems as if the risk-off sentiment has turned over the past couple of hours. The market might be putting more emphasis on the hawkish comments from the Fed," said Danske Bank senior analyst Jens Pedersen.

Gold, often seen as a safe-haven investment in times of geopolitical and financial uncertainty, benefited from the risk-averse sentiment in early trade but later dipped into the red.

"We think the Federal Reserve will indeed move in September, mainly on account of the timing of the upcoming U.S. election, coupled with the fact that, on aggregate, the economy is not as weak as most of the recent numbers suggest," INTL FCStone said in a note.

Fed governor Lael Brainard is scheduled to give a talk in Chicago later on Monday, a day before the central bank's communications blackout takes effect in the build-up to next week's policy meeting.

There is chance for some more volatility ahead with Brainard's speech, MKS PAMP Group said in note.

Hedge funds and money managers increased their net long position in COMEX gold contracts to a nine-week high in the week to Sept. 6 and also raised a bullish stance in silver, U.S. Commodity Futures Trading Commission data showed on Friday. Gold Trust GLD , the world's largest gold-backed exchange-traded fund, said its holdings fell 1.12 percent to 939.94 tonnes on Friday. GOL/ETF

Silver XAG= shed 0.4 percent to $18.95 an ounce, having touched its lowest since Sept. 2 at $18.75.

Platinum XPT= fell 1.3 percent to $1,044 and palladium XPD= was down 2.2 percent at $660.25, both at their lowest level in more than a week.

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