PRECIOUS-Gold rises to 1-week high on subdued dollar, Fed rate cut hopes

Reuters

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    * SPDR Gold holdings rise 0.5% on Wednesday
    * Palladium hits more than six-week high

 (Updates prices)
    By Eileen Soreng
    June 13 (Reuters) - Gold prices rose to a week high on
Thursday, supported by expectations of an interest rate cut by
the U.S. Federal Reserve following soft inflation data, which
also weighed on the dollar. 
    Spot gold  XAU=  was up 0.3% at $1,336.56 per ounce at 1146
GMT, having touched its highest since June 7 at $1,338.87
earlier in the session.
    U.S. gold futures  GCv1  were also 0.3% higher at $1,340.3
an ounce.
    "We had disappointing U.S. inflation data which reinforced
market expectations that the Fed would cut interest rates which
itself is a positive for gold and related to that we see some
weakness on U.S. dollar today," Julius Baer analyst Carsten
Menke said.
    Data from the Labor Department showed on Wednesday U.S.
consumer prices barely rose in May, pointing to moderate
inflation that together with a slowing economy increased
pressure on the U.S. central bank to cut interest rates this
year.  urn:newsml:reuters.com:*:nL2N23I1A9
    Fed policymakers are scheduled to meet on June 18-19 against
the backdrop of rising trade tensions, slowing growth and a
sharp step-down in hiring in May which have led financial
markets to price in at least two rate cuts by the end of 2019.
    Lower interest rates decrease the opportunity cost of
holding non-yielding bullion and weigh on the dollar, making
gold cheaper for investors holding other currencies.
    The dollar index  .DXY  versus a basket of six major
currencies was down 0.1% on Thursday.  USD/ 
    On the trade front, U.S. President Donald Trump declined to
set a deadline on Wednesday for levying tariffs on another $325
billion of Chinese goods and called the relationship with
Beijing good but "testy" after China walked back commitments for
a trade deal.  urn:newsml:reuters.com:*:nL2N23J0XO
    "Since the beginning of June we've had quite constant
inflows into physically backed gold products as investors are
weighing risks related to the trade tensions between the U.S.
and China and also between U.S. and Mexico," Julius Baer's Menke
added.
    Holdings of SPDR Gold Trust  GLD , the world's largest
gold-backed exchange-traded fund, rose 0.5% to 759.70 tonnes on
Wednesday from 756.18 tonnes on Tuesday.  GOL/ETF 
    On the technical side, the next topside resistance for gold
sits between $1,346-$1,349 and if this breaks a quick rise to
$1,360-$1,366 would be on the cards, MKS PAMP Group said in a
note.
    "On the downside, we believe there will be macro and
physical support between $1,305-$1,320, which we view as a good
buying opportunity," it said.
    Elsewhere, silver  XAG=  climbed 0.5% to $14.81 per ounce
and platinum  XPT=  was up 0.4% at $811.81.
    Palladium  XPD=  gained 1.7% to $1,429.75 an ounce after
hitting a more than six-week high of $1,433.41 earlier in the
session.

 (Reporting by Eileen Soreng and Brijesh Patel in Bengaluru,
editing by Deepa Babington and Kirsten Donovan)
 ((eileen.soreng@thomsonreuters.com; Within U.S. +1 651 848
5832, Outside U.S. +91 80 6749 6131; Reuters Messaging:
eileen.soreng.thomsonreuters.com@reuters.net))

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