PRECIOUS-Gold falls on worries over Fed stimulus curb

Reuters Middle East

* Bullion in retreat after hitting two-month high * Rising bond yields signal Fed tapering soon * SPDR Gold sees first weekly inflow in months * Coming up: US Chicago Fed index Tuesday (Adds comment, technical view, second byline, dateline) By Frank Tang and Zhe Sun NEW YORK/LONDON, Aug 19 (Reuters) - Gold fell on Monday, snapping a three-day winning streak, as rising U.S. bond yields signal the U.S. Federal Reserve could be moving closer to reducing monetary stimulus next month, analysts said. Bullion has rallied in recent weeks due to uncertainty about the timing of the Fed's planned stimulus scale-back, technical buying triggered by a break above the key $1,350 mark, and fresh inflows into bullion-backed exchange-traded funds. Traders said the gold market will now likely take trading cues from the latest minutes of the Fed's policy meeting in July which are set for release later this week. "Given the thin summer trading conditions, gold prices are likely to stay choppy ahead of the Fed Open Market Committee minutes release," said James Steel, chief precious metals analyst at HSBC. Spot gold fell 0.7 percent to $1,365.54 an ounce by 4:18 p.m. EDT (2018 GMT), having earlier hit a two-month peak of $1,384.10. U.S. gold futures for December delivery settled down $5.30 at $1,365.70, with trading volume 30 percent below its 30-day average, preliminary Reuters data showed. Longer-dated U.S. Treasury yields rose to two-year highs on Monday, extending weakness after their worst week in two months, as investors worried about the effect on the market if the Federal Reserve reduces its bond purchase program next month. "There's a mystery at the moment, because the bond market clearly believes that the Fed tapering is just about to start," said Jesper Dannesboe, senior commodity strategist at Societe Generale. Unlike equities or bonds, gold yields no dividends or interest and the metal is particularly sensitive to rises in U.S. interest rates. Providing some support to gold, the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, posted a 0.4 percent increase in its holdings last week to 915.32 tonnes, its first net gain in months. So far this year, investors have withdrawn about $19 billion from the fund. Silver was down 0.3 percent to $23.14, having earlier risen to its highest in almost three months at $23.60. Last week, the metal made its biggest weekly gain since September 2008, up around 13 percent. Platinum was down 1 percent at $1,504.49, and palladium fell 1.4 percent to $749.75 an ounce. On charts, palladium looks set to form a bearish formation known as the "death cross" as its 50-day moving average is falling below 200-day moving average, suggesting the short-term momentum has turned more negative. 4:18 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold DEC 1365.70 -5.30 -0.4 1362.00 1384.10 117,621 US Silver SEP 23.166 -0.156 -0.7 22.955 23.605 45,393 US Plat OCT 1509.00 -18.60 -1.2 1505.60 1529.80 5,853 US Pall SEP 752.90 -10.15 -1.3 747.50 764.45 5,929 Gold 1365.90 -10.00 -0.7 1363.08 1384.10 Silver 23.140 -0.060 -0.3 23.010 23.600 Platinum 1504.49 -14.51 -1.0 1508.50 1526.00 Palladium 749.75 -10.75 -1.4 752.00 762.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 128,007 192,008 189,242 23.65 1.40 US Silver 56,004 50,226 53,816 33 1.84 US Platinum 6,060 9,023 12,526 20.43 0.05 US Palladium 8,772 3,972 5,268 (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Veronica Brown, Jane Baird and Jim Marshall)

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