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PRECIOUS-Gold steady as equities drop, Fed rate hike prospects wane

Published 03/08/2016, 04:40 pm
© Reuters.  PRECIOUS-Gold steady as equities drop, Fed rate hike prospects wane
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* Platinum dips after touching near 16-month high on Tuesday

* Palladium down after hitting over 1-yr high in prev session (Updates prices)

By Koustav Samanta

Aug 3 (Reuters) - Gold held on to the previous session's gains on Wednesday as Asian stocks stumbled and weak U.S. economic data undermined expectations of a near-term interest rate hike.

The metal has had a stellar year so far, surging about 28 percent, as investors sought the safe-haven asset amid mounting economic worries, predominantly in the Western world. gold XAU= was up slightly at $1,364.15 an ounce by 0625 GMT, after hitting a high of $1,367.33, its loftiest since July 11, in the previous session.

U.S. gold GCcv1 dipped about 0.1 percent to $1,371.50 an ounce.

"We saw the equity markets weaken overnight and that has certainly helped the risk-off mode," said ANZ analyst Daniel Hynes.

Asian shares bowed lower on Wednesday with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS falling about 1 percent. MKTS/GLOB

The yen lorded over a weakened U.S dollar as fears that the Bank of Japan may retreat from its massive bond-buying campaign added to a shakeout in debt markets globally.

"We see that the strong yen has helped push Japanese investors back into the gold markets," Hynes added.

A report from the U.S. Commerce Department on Tuesday showed inflation was still muted in the country, which together with the anaemic economic growth pace in the second quarter, could encourage a cautious Federal Reserve to keep interest rates at current levels for a while. metal is highly sensitive to U.S. interest rates, increases in which lift the opportunity cost of holding non-yielding gold while boosting the dollar, in which it is priced.

"We see further upside in gold and would not be surprised to see values get to and even break $1,400, especially if there is continued dollar weakness and more wobbles in the U.S. equities," INTL FCStone analyst Edward Meir said in a note.

Spot gold may retrace moderately to a support at $1,358 per ounce before retesting a resistance at $1,368, as suggested by its wave pattern and a Fibonacci projection analysis, Reuters technical analyst Wang Tao said. of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose 0.62 percent to 969.97 tonnes on Tuesday. GOL/ETF

Among other precious metals, spot silver XAG= rose 0.2 percent to $20.65 per ounce, a day after touching a four-week high of $20.78, while spot platinum XPT= fell 0.1 percent to $1,162 per ounce, after touching $1,177.40, its highest since April 2015, in the previous session.

Spot palladium XPD= fell 0.6 percent to $709.90 per ounce, after rising to $722.90 on Tuesday, the highest since June 2015.

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