Reuters | Mar 13, 2018 23:26
* Spot gold to fall further towards $1,300/oz -analyst
* Trump fires Secretary of State Tillerson (Updates prices; adds comment, NEW YORK to dateline, additional byline)
By Renita D. Young and Eric Onstad
NEW YORK/LONDON, March 13 (Reuters) - Gold prices turned positive on Tuesday as the U.S. dollar lost ground after news that U.S. President Donald Trump replaced Secretary of State Rex Tillerson, while U.S. inflation data was in line with forecasts.
Spot gold XAU= was up 0.3 percent at $1,326.49 an ounce by 1:42 p.m. EDT (1742 GMT), while U.S. gold futures GCcv1 for April delivery settled up 0.5 percent at $1,327.10.
Trump fired Tillerson after a series of public rifts over policy on North Korea, Russia and Iran, replacing him with loyalist Central Intelligence Agency Director Mike Pompeo. dollar is lower and gold is higher off the Tillerson news. We've been seeing this pattern (of gold following the dollar) because there's no other strong factor leading to buying gold now," said Bill O'Neill, co-founder of Logic Advisors.
Also weighing on the dollar was news that U.S. consumer prices cooled in February, the latest indication that an expected pick-up in inflation is likely to be only gradual. investors had been worried stronger-than-expected CPI data could stoke expectations that the U.S. Federal Reserve will raise interest rates four times rather than three this year.
Higher interest rates typically make gold less attractive since it does not bear interest.
"Overall the outlook is not looking that great in the short term. I still expect prices to go towards $1,300, said Georgette Boele, ABN AMRO (AS:ABNd) commodity strategist.
Markets are looking to the next Fed meeting for direction on the pace of U.S. interest rate hikes this year.
"As we approach next week's FOMC day, we should see gold come under pressure as it struggles to compete against interest-bearing assets," said Daniel Ghali, commodities strategist at TD Securities.
Silver XAG= rose 0.6 percent at $16.59 an ounce.
The platinum price will struggle to move back above palladium, ING analyst Oliver Nugent said in a note.
"Based on our own forecasts, we don't think such a move will happen for the next few years due to platinum's weaker fundamentals with the palladium backwardation actually making it more expensive for investors to short the ratio."
The platinum/palladium ratio increased from late February. Palladium flipped to a premium over platinum last September for the first time since 2001.
Written By: Reuters
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