PRECIOUS-Gold eases as strong dollar erodes appeal to investors

Published 2018-10-09, 09:34 a/m
© Reuters.  PRECIOUS-Gold eases as strong dollar erodes appeal to investors
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* IMF cuts global economic growth forecasts for 2018, 2019

* Spot gold may end its weak bounce below $1,193/oz- technicals

(Updates prices, adds comment)

By Arpan Varghese

BENGALURU, Oct 9 (Reuters) - Gold prices eased for a second session on Tuesday as a stronger dollar and bullish U.S. interest rate outlook outweighed support from an earlier equity sell-off.

Spot gold XAU= was down 0.1 percent at $1,186.79 per ounce at 1256 GMT. On Monday, it fell 1.2 percent in its biggest one-day percentage decline since Aug. 15, also touching a more than one-week low of $1,183.19.

U.S. gold futures GCv1 edged up 0.1 percent to $1,190.00.

Europe battled to fend off a four-day losing streak for world stocks, after weary investors saw Asian shares stumble to a 17-month low and bond markets hit by fresh selling. MKTS/GLOB

Adding to the bleak outlook, the International Monetary Fund cut its global economic growth forecast for the first time since 2016, citing pressure from trade tussles between the United States and China. of the main themes in gold markets are the U.S. Federal Reserve rate hike, higher yields and dollar strength," said Jens Pedersen, senior analyst at Danske Bank.

"At the same time, fragile emerging markets and higher oil prices will mitigate those headwinds."

Gold has held in a $34 range for the last 1-1/2 months, which some analysts say suggests resilience, supported by concerns over economic growth in emerging markets and

inflationary pressure from soaring oil prices. USD/ O/R

Some analysts said physical buying would emerge at the lower price levels.

However, the metal, traditionally considered a prudent store of value during political and economic uncertainty, has lost much of its safe-haven appeal this year with investors increasingly opting for the greenback instead, especially as the U.S.-China trade war unfolded.

Higher interest rates boost the dollar and push bond yields up, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion.

The Fed increased interest rates last month for the third time this year and is widely expected to hike again in December, with no suggestion its tightening policy will end any time soon.

Spot gold may end its recent weak bounce below resistance at $1,193 per ounce, and then retest support at $1,184, as suggested by a projection analysis, according to Reuters technical analyst Wang Tao. other precious metals, spot silver XAG= eased 0.1 percent to $14.33. Platinum XPT= inched 0.1 percent lower to $816.70 and palladium XPD= dipped 0.3 percent to $1,072.24.

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