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PRECIOUS-Gold pares losses as dollar comes off seven-week high

Published 02/03/2017, 06:26 am
Updated 02/03/2017, 06:30 am
© Reuters.  PRECIOUS-Gold pares losses as dollar comes off seven-week high
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* Fed comments dominate as Trump offers no detail on stimulus

* Focus shifts to Fed Chair Janet Yellen's Friday speech

* Dollar index pares gains after tapping seven-week high (New throughout, updates prices, market activity and comments, adds second byline, NEW YORK dateline)

By Marcy Nicholson and Maytaal Angel

NEW YORK/LONDON, March 1 (Reuters) - Gold gave back most of its losses on Wednesday as the dollar pared gains and bullion shrugged off earlier pressure from U.S. Federal Reserve officials' comments that raised expectations of an interest rate hike in March.

New York Fed President William Dudley, one of the most influential U.S. central bankers, said the case for tightening monetary policy had become "a lot more compelling," while San Francisco Fed President John Williams said he saw "no need to delay" raising rates. gold XAU= was down 0.1 percent at $1,246.83 an ounce by 2:12 p.m. EST (1912 GMT), heading for a third straight day of losses. The metal hit its highest since Nov. 11 at $1,263.80 on Feb. 27.

U.S. gold futures GCcv1 settled down 0.3 percent at $1,250.

The perceived probability of a March rate hike jumped to 67.5 percent from roughly 30 percent after the Fed officials' comments on Tuesday, according to Thomson Reuters data.

"The initial reaction was a major sell-off. A lot of people are skeptical over how the percent changed drastically," said Phillip Streible, senior commodities broker for RJO Futures in Chicago, referring to geopolitical risks.

"Now people are digesting the information and looking at some of the outside developments."

Rising U.S. interest rates increase the opportunity cost of holding non-yielding gold, while boosting the dollar.

Data on Wednesday showed U.S. consumer price inflation jumped 0.4 percent in January, the largest increase since February 2013, while consumer spending increased 0.2 percent. Chair Yellen will be giving a speech on Friday. If Yellen's remarks also point to a rate hike in the near future, this will weigh on the gold price," Commerzbank (DE:CBKG) said in a note.

Expectations that President Donald Trump would give details on U.S. stimulus plans on Tuesday were largely disappointed, as he failed again to provide detail on tax reform and infrastructure spending. speech did, however, contrast with the harsher rhetoric investors have come to expect, tempting some into riskier assets and knocking gold's appeal as a safe haven.

The dollar .DXY index climbed to a seven-week high but later pared losses.

India's February gold imports surged more than 82 percent from a year ago as consumers ramped up purchases for weddings, provisional data from consultancy GFMS showed. silver XAG= rose 0.6 percent at $18.40 an ounce, platinum XPT= fell 1.1 percent at $1,012.25 and palladium XPD= gained 0.9 percent at $775.75.

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