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PRECIOUS-Gold eases as dollar strengthens on U.S. debt deal

Published 23/07/2019, 10:25 pm
© Reuters.  PRECIOUS-Gold eases as dollar strengthens on U.S. debt deal
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* Gold narrows losses slightly after Boris Johnson's election

* ECB to meet on Thursday, Fed on July 30-31

* Spot gold may fall to $1,401-$1,409/oz range - technicals

* Silver could see some correction after strong run- analyst (Adds comments, updates prices)

By Karthika Suresh Namboothiri

July 23 (Reuters) - Gold prices slipped to a near one-week low on Tuesday as the dollar strengthened following a deal on extending a debt limit in the United States.

President Donald Trump and U.S. congressional leaders agreed on Monday on a two-year extension of the debt limit and federal spending caps to avert a government default this year but adding to budget deficits in the world's largest economy, lifting the dollar. gold XAU= fell 0.1% to $1,423.25 per ounce as of 1212 GMT. Prices had dropped to $1,413.80 earlier in the session, last touched on July 17.

U.S. gold futures GCcv1 dropped 0.2% to $1,423.90.

"We are seeing some dollar strength. It is no surprise there is a little bit of profit-taking coming in," said Ross Norman, chief executive at bullion dealer Sharps Pixley.

"This does not mean the bull run is over. Gold needs to consolidate on those higher levels and is taking a breather."

The greenback rose 0.3% versus a basket of its rivals .DXY to 97.56, its highest level since July 9, making gold more expensive for holders of other currencies. USD/

The Fed is seen as certain to cut its benchmark rate at its July 30-31 meeting. The European Central Bank (ECB) is also expected to signal easier monetary policy when it meets on Thursday.

"You've seen a sharp upward move over the past weeks in gold. The momentum seems to have been lost and some short-term investors have looked to take those healthy profits ahead of the U.S. Federal Reserve decision next week," said Capital Economics analyst Ross Strachan.

Bullion narrowed losses following news that Boris Johnson would replace Theresa May as Britain's new prime minister. underlying support, analysts say gold could post losses in the coming days. Gold may fall into a range of $1,401-$1,409 per ounce as it has broken a support at $1,422, said Reuters technical analyst Wang Tao. silver XAG= rose 0.5% to $16.42 an ounce.

"Silver has authenticated gold's rally... What this has done is put the gold-silver ratio down to a level which you might not ordinarily expect, just below 87," said Sharps Pixley's Norman, adding some correction in silver could be expected.

Holdings of the largest gold-backed ETF, New York's SPDR Gold Trust, rose 0.6% on Monday from Friday, while the largest silver-backed ETF, the iShares Silver Trust SLV , rose 2.6% during the same period. Holdings in the silver ETF have risen about 10% so far this month. GOL/ETF

Among other precious metals, palladium XPD= dipped slightly to $1,528.01 per ounce, while platinum XPT= rose 0.6% to $849.25.

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