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PRECIOUS-Gold falls to lowest in a week on strong dollar

Published 23/10/2015, 02:58 am
© Reuters. PRECIOUS-Gold falls to lowest in a week on strong dollar
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* Gold retains losses from previous session

* Prices plunge on dovish ECB, U.S. data; rebound on short-covering

* Dollar strength, technicals drag (Releads, adds comment, updates prices)

By Mariana Ionova

LONDON, Oct 22 (Reuters) - Gold fell to its lowest in more than a week on Thursday, pressured by a strong dollar and uncertainty over the timing of a U.S. Federal Reserve interest rate rise.

Spot gold XAU= eased 0.1 percent to $1,165.76 an ounce by 1546 GMT, after touching a new low since Oct. 13 at $1,162.50 earlier. The metal closed 0.8 percent lower the day before.

Prices were pressured by a strong dollar, which surged after a dovish European Central Bank sent the euro tumbling and better-than-expected U.S. jobless claims revived hopes that the Federal Reserve may still raise rates this year. urn:newsml:reuters.com:*:nL1N12M1L5 urn:newsml:reuters.com:*:nL1N12M15S

"The figures out of the U.S. were not bad at all," said Afshin Nabavi, head of trading at MKS. "Because of that, I think a lot of people must have gone intraday short."

Short-covering later in the session helped the metal stabilise, although the market remained cautious as uncertainty around U.S. monetary policy remained in focus.

Gold fell to 5-1/2 year lows earlier this year on expectations that the U.S. central bank will raise interest rates this year, potentially lifting the opportunity cost of holding non-yielding bullion.

Market expectations of higher rates have been shaken recently by sluggish U.S. data and concerns about the global economy. But the newest figures could add to the case for a rate rise in December.

"People are getting a bit more nervous about what's coming up," said Georgette Boele, FX and commodity strategist at ABN AMRO. "The market has been very dovish regarding the Fed and they have only become more dovish recently."

Sentiment was further dampened by technicals on Thursday, as gold drifted away from the 200-day moving average around $1,175 per ounce. The metal had held near the long-term resistance level for six straight sessions, after last week breaking through it for the first time since May.

"We need a real break on the upside," Nabavi said. "And we're not really having this."

Gold is expected to keep edging down into next year. Goldman Sachs (N:GS) estimates prices at $1,100 in three months, $1,050 in six months and $1,000 in 12 months.

Silver XAG= was up 1 percent at $15.83 an ounce, platinum XPT= rose 0.6 percent to $1,005 an ounce and palladium XPD= gained 0.9 percent to $678.10 per ounce.

China imported 338 tonnes of silver in September, up 39 percent year-on-year, data showed on Wednesday. Imports in the first nine months of the year rose 21.6 percent from the same period last year. urn:newsml:reuters.com:*:nEAP222049

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