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Gold flat after hitting 2018 low as dollar, Treasuries firm

Reuters  |  NEW YORK/LONDON 

By and Jan Harvey

NEW YORK/LONDON (Reuters) - Gold was flat after sliding to a fresh 2018 low on Thursday as another rise in U.S. bond yields and concerns over political risk in held the dollar index near its 2018 peak.

The has fallen more than 2 percent this week on gains in the U.S. currency and a rise in U.S. 10-year Treasury yields to seven-year highs. Higher yields increase the opportunity cost of holding non-yielding assets such as bullion.

But gold got some support from geopolitical strife in

Spot gold was flat at $1,290.51 per ounce by 1:37 p.m. EDT (1737 GMT), off an earlier 4-1/2-month low of $1,285.41. U.S. gold futures for June delivery settled down $2.10, or 0.2 percent, at $1,289.40 per ounce.

The dollar has climbed nearly 4 percent this quarter on expectations the will lift U.S. interest rates further this year to curb inflation, at a time when other central banks are still keeping monetary policy loose.

"The dollar and the interest rates are what's really driving gold," said Chris Gaffney, of world markets at

"Gold has further down to go, because the dollar has room to go higher."

The euro remains under pressure, hovering near a five-month low on concerns that political developments in could cause wider disruption in the common currency bloc.

Political uncertainty arising out of after threatened to pull out of a meeting with the was likely to limit downside for gold, analysts said.

Market watchers, unsure if the will be able to aggressively hike rates and concerned about political uncertainty, lent support to gold prices, said Ryan McKay, at

But gold "still remains vulnerable to the prevailing dollar and rate headwinds," said in a note.

From a technical perspective, gold prices were looking vulnerable to further losses after breaking below key chart levels this week, according to analysts who study past price moves to determine the future direction of trade.

"Gold has eroded key support, namely the 200-day moving average, the $1,302.74 March low and the 50 percent retracement (of the December-to-January rally)," said in a note on technicals. "We have been forced to neutralize our outlook as the market is now on the defensive."

Meanwhile, silver increased 0.6 percent to $16.44 an ounce.

gained 0.4 percent to $890.80 per ounce, off an earlier five-month low of $879, while palladium declined 0.6 percent to $977.47.

(Additional reporting by in Bengaluru; Editing by and Bernadette Baum)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 17 2018. 23:19 IST