SINGAPORE, April 20 (Reuters) - Gold retained sharp
overnight gains on Wednesday as disappointing U.S. housing data
dented the dollar and supported the Federal Reserve's cautious
stance on interest rates.
FUNDAMENTALS
* Spot gold XAU= was little changed at $1,250.80 an ounce
by 0039 GMT, following a 1.5 percent gain on Tuesday.
* U.S. housing starts fell more than expected in March and
permits for future home construction hit a one-year low,
suggesting some cooling in the housing market in line with signs
of a sharp slowdown in economic growth in the first quarter.
* Tuesday's report from the Commerce Department continued
the recent run of weak data that has cast a pall on the
economy's prospects.
* The dollar fell 0.5 percent against a basket of major
currencies on Tuesday, although it ticked higher early on
Wednesday. USD/
* The weak data supported market sentiment that the Fed
would find it hard to raise U.S. interest rates this year after
hiking the overnight rates in December for the first time in
nearly a decade.
* While futures markets imply no further hikes until
December, Fed projections imply about two more hikes before year
end.
* Gold is sensitive to rising interest rates, which lift the
opportunity cost of holding non-yielding assets.
* Holdings in SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, slid 7.43 tonnes to 805.03
tonnes on Tuesday, the biggest drop in a month. Persistent
outflows could undermine the rally in gold prices.
* The drop in the dollar also supported other precious
metals. Silver XAG= jumped 4.4 percent on Tuesday, in its
biggest rise since October, and hit a 10-month high. It retained
those gains in early Wednesday trading.
* Platinum XPT= was trading near a six-month high of
$1,015.70, after climbing nearly 4 percent in the previous
session. Palladium XPD= was holding near its highest in a
month.
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TOP/MTL or GOL
MARKET NEWS
* Asian shares reached six-month peaks on Wednesday as a
falling U.S. dollar and fading concerns about China lifted
commodity prices and risk appetite generally. MKTS/GLOB
DATA AHEAD (GMT)
0600 Germany Producer prices Mar
1400 U.S. Existing home sales Mar
PRICES AT 0039 GMT
Metal Last Change Pct chg
Spot gold 1250.8 0.7 0.06
Spot silver 16.917 -0.018 -0.11
Spot platinum 1010.06 -1.7 -0.17
Spot palladium 582.5 2 0.34
Comex gold 1252.2 -2.1 -0.17
Comex silver 16.935 -0.037 -0.22
COMEX gold and silver contracts show the
most active months