PRECIOUS-Gold climbs to 2-week high ahead of U.S. inflation data


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    * Dollar index hits lowest since Sept. 26 
    * Palladium touches five-week high 
    * GRAPHIC-2017 asset returns: 
 (Adds comments, news from White House, updates prices) 
    By Devika  Krishna Kumar and Zandi Shabalala 
    NEW YORK/LONDON, Oct 12 (Reuters) - Gold prices edged higher 
to a more than two-week high on Thursday as focus shifted to U.S 
inflation figures due on Friday which are expected to give more 
clues on monetary policy. 
    Minutes from a U.S. Federal Reserve September meeting showed 
policymakers had a prolonged debate about prospects of a pick-up 
in inflation and slowing the path of future interest rate rises 
if it did not.*:nL2N1MM1QS 
    The dollar inched up after U.S. data showed new applications 
for U.S. unemployment benefits last week fell to a more than 
one-month low after being boosted by two hurricanes.*:nL2N1MM1J0 
    But the greenback still languished near two-week lows 
against a basket of currencies, weighed down by the U.S. Fed 
minutes which the market interpreted as dovish.  USD/  
    After four straight sessions of gains, spot gold  XAU=  
steadied at $1,293.40 an ounce by 3:30 p.m. EDT (1930 GMT). 
Prices earlier hit $1,297.40, the highest since Sept. 26. U.S. 
gold futures  GCcv1  settled higher at $1,296.50 per ounce. 
    "The market is looking for a little direction and there's 
not much on the horizon until we get more geopolitical conflict 
or we see interest rates pick up," said Rob Haworth, senior 
investment strategist at U.S. Bank Wealth Management. 
    A strong corporate earnings season could also give the Fed 
room to continue raising rates, which would be a headwind for 
gold, Haworth said. 
    Gold is highly sensitive to rising interest rates, as they 
tend to boost the dollar, in which the metal is priced. 
    Several policymakers said they would focus on upcoming 
inflation data over the next few months when deciding on the 
central bank's future rate hike path. 
    "Overall, for the rest of 2017 we are not bullish on prices, 
especially with a rate hike still expected this year, and we are 
looking more towards 2018 for strength," RBC Capital Markets 
said in a note. 
    U.S. President Donald Trump is "some time away" from making 
a decision about who should chair the Federal Reserve, White 
House chief of staff John Kelly said on Thursday.*:nS0N1MD00M 
    Political uncertainty also helped to support gold, which 
investors turn to during periods of turmoil, analysts said. 
    "If people are not too worried about the Fed's policy, we 
have North Korea. Surely, geopolitical tensions are supporting 
prices," Yuichi Ikemizu, Tokyo branch manager at CIBC Standard 
Bank, said. "We may try $1,300 next week." 
    The upcoming Diwali festival in India could also spur gold 
buying, analysts said. 
    Silver  XAG=  rose 0.4 percent to $17.23 an ounce after 
touching a three-week high. 
    Platinum  XPT=  was 0.8 percent higher at $935.49 an ounce, 
after hitting a more than two-week high earlier in the session.  
    Palladium  XPD=  jumped 1.9 percent to $977.25, its highest  
since Sept. 6. 
    Discussions over a possible substitution between platinum 
group metals in auto catalysts will likely gather pace if the 
palladium continues to trade at a premium to the platinum, Bank 
of America Merrill Lynch said in a note earlier this month.  
 GRAPHIC-2017 asset returns: 
 (Additional reporting by Apeksha Nair in Bengaluru; Editing by 
Mark Potter and Richard Chang) 
 ((; +1 646 223 6059; Reuters 

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