PRECIOUS-Gold pares gains as Turkish currency crisis roils markets

Reuters

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    * Turkish lira plunges, U.S. dollar hits 13-month high
    * Lira crisis spurs safe-haven demand for gold
    * GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl

 (Recasts; updates prices, headline; adds comment, byline,
changes dateline to CHICAGO, previous LONDON)
    By Renita D. Young and Peter Hobson
    CHICAGO/LONDON, Aug 10 (Reuters) - Gold prices gave up
earlier gains on Friday, with the crisis engulfing Turkey's lira
boosting demand for bullion as a safe investment while at the
same time bolstering the U.S. dollar, making gold more expensive
for buyers with other currencies.
    Investors rushed to the safety of the greenback as the lira
collapsed as much as 23 percent to a record low, Russia's rouble
crumbled to its lowest in more than two years and the euro and
pound touched their weakest levels in a year.  urn:newsml:reuters.com:*:nL5N1V10HI
 FRX/  
    With the turmoil in Turkey spreading to other markets, gold
- traditionally used as a safe investment in times of
uncertainty - also saw some extra interest, Saxo Bank analyst
Ole Hansen said.
    "There is a battle going on between the strengthening dollar
and some safe-haven demand emerging from the contagion risk
following the collapse of the lira." 
    But gold prices later pared gains.
    Spot gold  XAU=  was unchanged at $1,211.94 per ounce by
1:43 p.m. EDT (1743 GMT), with the dollar  .DXY  more than 0.9
percent stronger against a basket of major currencies. Gold was
set to end the week largely unchanged after four consecutive
weeks of price falls.
    U.S. gold futures  GCcv1  for December delivery settled down
90 cents, or 0.1 percent, at $1,219 per ounce. 
    Gold has tumbled 11 percent from an April high to a one-year
low of $1,204 last week as the dollar rallied to 13-month highs
and investors exited gold positions and began to speculate on
lower prices.      
    "The price action is telling us that people don’t want to
buy gold now. It’s in a downtrend, so that’s adding more weight
to push it down further," said Michael Matousek, head trader at
U.S. Global Investors.
    "You need to see it above $1,260, before you see that trend
turn around," close to the $1,265.87 per ounce July high.
    Expectations that the U.S. Federal Reserve will raise
interest rates next month bolstered the dollar and U.S. bond
yields and damaged the appeal of non-yielding gold.
 urn:newsml:reuters.com:*:nW1N1TF022 urn:newsml:reuters.com:*:nL1N1V00GO
    Momentum indicators suggest prices will fall further,
analysts at ScotiaMocatta said, with support at gold's July 2017
low of $1,204.90. 
    Silver  XAG=  was down 0.9 percent at $15.27 an ounce,
platinum  XPT=  lost 0.2 percent at $828.50 and palladium  XPD= 
gained 0.1 percent at $907.80 an ounce.
    All three metals were on track to end the week largely flat.
   

 (Additional reporting by Apeksha Nair in BENGALURU; Editing by
William Maclean and Bernadette Baum)
 ((Renita.Young@tr.com; 1 312 505 3359; Twitter: @RenitaDYoung
twitter.com/renitadyoung.com))

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