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PRECIOUS-Gold hits 1-year low as dollar firms on U.S. Fed rate outlook

Published 18/07/2018, 05:26 pm
Updated 18/07/2018, 05:26 pm
© Reuters.  PRECIOUS-Gold hits 1-year low as dollar firms on U.S. Fed rate outlook

© Reuters. PRECIOUS-Gold hits 1-year low as dollar firms on U.S. Fed rate outlook

* Dollar at 6-month high vs yen after outlook from Fed's Powell

* Spot gold to hover above $1,226 an ounce - technicals

* Silver slips to its weakest since July 2017 (Adds comment, detail, and updates prices)

By Karen Rodrigues

BENGALURU, July 18 (Reuters) - Gold prices slipped to their lowest in a year on Wednesday, as the dollar firmed after Federal Reserve Chairman Jerome Powell's U.S. economic outlook reinforced views that the central bank is on track to steadily hike interest rates.

Spot gold XAU= was down 0.2 percent at $1,224.16 an ounce, as of 0657 GMT. Earlier in the session, the yellow metal hit its weakest since mid-July 2017 at $1,221.74 an ounce.

U.S. gold futures GCcv1 for August delivery were 0.2 percent lower at $1,224.30 an ounce.

The stronger dollar following Powell's comments weighed on gold prices, said Yuichi Ikemizu, Tokyo branch manager, ICBC Standard Bank.

"People are selling (instruments of) emerging markets, commodities and buying the dollar as it seems to be the most stable investment. As long as this trend continues ... it's a pretty tough situation for commodities," Ikemizu said.

The dollar rose across the board on Wednesday, climbing to a six-month high against the yen, after U.S. Federal Reserve Chairman Jerome Powell gave an upbeat outlook for the economy and reinforced views that the Fed was on track to steadily hike interest rates. USD/ another central banker on Tuesday said that with the U.S. economy firing on all cylinders, the Fed should ease away from monetary policy accommodation and move interest rates up far enough to prevent unwanted inflation but not so fast that a recession ensues. interest rates tend to boost the dollar and push up bond yields, making greenback-denominated gold more expensive for holders of other currencies and denting its appeal.

"With the USD on a solid footing, gold prices should stay pressured lower for the foreseeable future as gold has wholly lost its glittering appeal in this enduringly bullish equity and USD environment," said Stephen Innes, APAC trading head, OANDA.

However, Reuters technicals analyst Wang Tao said spot gold has found support at $1,226 per ounce and may hover above this level or bounce towards resistance at $1,237. TECH/C

Among other precious metals, silver XAG= slipped 0.5 percent to $15.47 an ounce, after touching $15.39 per ounce, its lowest since July last year.

Platinum XPT= lost 0.6 percent to $807.50 an ounce, and hit a two-week low of $804.75 an ounce earlier in the session.

Palladium XPD= climbed 0.1 percent to $911.90 per ounce.

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