PRECIOUS-Gold hits two-week high as dollar tumbles after G20 trade message

Reuters

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    * Spot gold could test resistance at $1,237/oz -technicals 
    * Dollar index  .DXY  drops to six-week low 
    * SPDR gold holdings down 0.35 pct on Friday 
 
 (Adds comments, updates prices, adds NEW YORK dateline) 
    By Devika  Krishna Kumar and Maytaal Angel 
    NEW YORK/LONDON, March 20 (Reuters) - Gold prices edged 
higher to a two-week peak on Monday as the dollar slid to a 
six-week low after a G20 weekend summit dominated by the U.S. 
administration's protectionist stance. 
    The precious metal has been rising since Wednesday, when the 
dollar dropped after the Federal Reserve raised U.S. interest 
rates but stopped short of predicting a sharper acceleration in 
monetary tightening over the next two years. 
    The dollar fell to a six-week low before recovering to trade 
0.1 percent higher  .DXY  against a basket of currencies.  USD/  
    Gold is sensitive to falling interest rates, which reduces 
the opportunity cost of holding non-yielding bullion. 
    "I think gold prices are going to continue to rally and the 
target to the upside is $1,250," said Phillip Streible, senior 
commodities broker for RJO Futures in Chicago. 
    "I don't anticipate that the Fed will be so aggressive on 
raising rates ... and there's a lot of uncertainty with Brexit 
becoming official later on in the month and there's a lot of 
questions circulating around Russia." 
    Markets had been volatile as FBI Director James Comey spoke 
on Monday, confirming the agency was investigating possible 
Russian government efforts to interfere in the 2016 U.S. 
election including any links between President Donald Trump's 
campaign and Moscow.  urn:newsml:reuters.com:*:nL2N1GX0NY 
    Spot gold  XAU=  rose 0.44 percent to $1,233.92 an ounce by 
2:14 EDT (1814 GMT), after touching $1,235.50, its highest since 
March 6. 
    U.S. gold futures  GCcv1  gained 0.3 percent to settle at 
$1,234.00. 
    Breaking a decade-long tradition of endorsing open trade, 
G20 finance ministers and central bankers made only a token 
reference to trade at the weekend, acquiescing to an 
increasingly protectionist United States.  urn:newsml:reuters.com:*:nL2N1GV096 
    Global markets balked at the move which soured risk 
appetite, pressuring stocks, the dollar and oil and driving 
investors into safe-haven gold.  MKTS/GLOB  
    The precious metal has rebounded more than $35 from the low 
hit before the Fed policy announcement last Wednesday, while the 
dollar has fallen 1.7 percent. 
    "The dovish outlook ... following last Wednesday's Fed 
meeting is clearly still having an impact. This is likely to 
lure a number of speculative financial investors back into gold 
after this group massively reduced their net long positions in 
the run-up to the meeting," Commerzbank said. 
    Money managers reduced their net long, or buy, positions in 
gold by 44,058 lots to 49,835 lots during the week to March 14, 
the lowest since early January.  CFTC/  
    Spot gold is expected to test resistance at $1,237, a break 
above which could lead to gains to $1,243, Reuters technical 
analyst Wang Tao said.  urn:newsml:reuters.com:*:nL3N1GX1BG      
    Denting the bullish gold narrative, holdings of SPDR Gold 
 GLD , the world's largest gold-backed exchange-traded fund, 
fell 0.35 percent to 834.10 tonnes on Friday.  urn:newsml:reuters.com:*:nENN2UJ6PS  
    Spot silver  XAG=  rose 0.3 percent to $17.37 an ounce, 
while platinum  XPT=  was up 1.2 percent at $969.70 and 
palladium  XPD=  firmed by 1.1 percent to $781.20. 
 
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Gold vs  managed money positions:     http://reut.rs/2mGKBnK 
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 (Additional reporting by Nallur Sethuraman in Bengaluru and 
Karl Plume in Chicago; Editing by Edmund Blair and James 
Dalgleish) 
 ((devika.kumar@thomsonreuters.com; +1 646 223 6059; Reuters 
Messaging: devika.kumar.thomsonreuters.com@reuters.net)) 
 
Keywords: GLOBAL PRECIOUS/  
     

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