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PRECIOUS-Gold steady as Sept rate hike views cool; stock rally caps gains

Published 06/09/2016, 05:26 pm
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* Technicals point spot gold moving back to $1,315

* Silver hits over two-week high

* Platinum, palladium touch one-week highs (Updates prices)

By Sethuraman N R

Sept 6 (Reuters) - Gold held steady on Tuesday as the dollar weakened on expectations that the U.S. Federal Reserve will not raise rates in September, but the yellow metal's gains were limited by stronger equity markets.

Spot gold XAU= was slightly up at $1,327.80 per ounce by 0658 GMT. The metal rose 0.1 percent on Monday.

U.S. gold futures GCcv1 were up 0.4 percent at $1,331.40.

The fact that gold did not move much despite disappointing U.S. nonfarm payroll numbers reflects the extensive level of speculative position in the gold markets either through futures or exchange traded funds, said Dominic Schnider of UBS Wealth Management in Hong Kong.

"The idea that the Fed is going to move, if not in September but in October, is limiting people from buying gold," he said, adding that prices could drop below $1,300 in the short term, with a good resistance level of $1,275.

Money managers held a net-long position of 231,594 U.S. gold futures contracts in the week to Aug. 30, the Commodity Futures Trading Commission said on Friday. That's up from 40,597 contracts a year ago.

The U.S. Labor Day holiday kept volumes subdued on Monday. New U.S. data releases and any speeches from Fed officials will be watched closely for clues to the timing of any rate hikes.

Gold could run into upside headwinds as the U.S. jobs number was not excessively weak and recent Fed official's comments have been hawkish, HSBC analyst James Steel said in a note.

However, if oil prices can gain upward traction on an agreement between top producers Saudi Arabia and Russia to cooperate in world oil markets, gold may be a beneficiary, Steel said.

Crude prices extended gains on Tuesday, buoyed after top producers Russia and Saudi Arabia agreed to cooperate on stabilising the oil market. O/R

Asian shares advanced on Tuesday, while the dollar index, which measures the greenback against a basket of six major currencies .DXY , slipped 0.2 percent to 95.688. MKTS/GLOB USD/

Spot gold may retrace to a support at $1,315 per ounce, as it failed to break a resistance at $1,330 again, according to Reuters technical analyst Wang Tao. Africa's biggest platinum mine-workers' union and the industry have failed to reach a deal on workers' pay, the union said on Monday, raising the prospect of industrial action in the world's top producer of the white metal. silver XAG= touched an over 2-week high of $19.57 an ounce.

Platinum XPT= was up 0.9 percent at $1,078.40 an ounce. It hit a one-week high of $1,078.80 earlier in the session. Palladium XPD= rose 0.8 percent to $683.90. It earlier touched a near one-week high of $685.20.

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