July 14, 2017 / 2:12 PM / in 4 months

PRECIOUS-Gold hits near 2-week high after U.S. data disappoints

    * Gold surges after U.S. data to highest since July 3
    * Funds pull back in silver while ETF investors keep buying
    * Palladium climbs 3 pct this week

 (New throughout with updated prices, comments; adds byline, NEW
YORK dateline)
    By Chris Prentice and Eric Onstad
    NEW YORK/LONDON, July 14 (Reuters) - Gold prices jumped 1.4
percent to the highest level in nearly two weeks on Friday after
data pointed to weak U.S. inflation, reaffirming doubts that the
U.S. central bank would again hike interest rates this year. 
    U.S. consumer prices were unchanged in June and retail sales
fell for a second straight month. Bond yields dipped and the
dollar index        slid to their lowest level since September
2016 after the weaker-than-expected figures.            
                  
    Spot gold        gained 0.96 pct at $1,228.61 per ounce by
3:01 p.m. EDT (1901 GMT) after hitting $1,232.76. It was poised
for a weekly gain of 1.3 percent, the biggest since mid-May.    
    The U.S. data bolstered expectations that the U.S. Federal
Reserve would likely to move slowly to continue raising interest
rates in the absence of inflation signs. Some had been expecting
another rate hike in 2017.
    Fed Chair Janet Yellen's comments to the U.S. Congress this
week "were more dovish than originally anticipated," said David
Meger, director of metals trading for High Ridge Futures in
Chicago.
    Friday's "data reaffirms the delay," he said. "We're seeing
precious (prices) buoyed on the back of that."
    The most-active U.S. gold futures         for August
delivery futures settled up $10.20, or 0.84 percent, at
$1,227.50 per ounce. The contract finished the week up 1.5
percent, its first gain in six weeks. 
    The weaker greenback boosted gold, making the dollar-priced
commodity cheaper for investors holding other currencies. 
    Ole Hansen, head of commodity strategy at Saxo Bank in
Copenhagen, said the chart picture had been damaged last week
when gold broke below its May lows, but bullion was now fighting
back.
    "The key level is $1,230 on gold. In order to turn neutral
again we need to move back above that level," he said. 
    Meanwhile, holdings at the SPDR Gold Trust      , the
world's largest gold-backed exchange-traded fund fell 0.43
percent to 828.84 tonnes on Thursday from 832.39 tonnes on
Wednesday.
    Silver prices        rose 1.79 pct at $15.94 per ounce,
heading toward a weekly gain of 2.3 percent.
    In silver, there was a sharp split between funds, which had
largely sold off their record long position, and ETF investors,
who had been recently buying, Hansen said.
    "A move above $16.20 could trigger quite a bit of
accelerated buying from the funds," he said.
    Palladium        gained 0.81 percent at $858.65 per ounce
and was set to end the week 2.4 percent higher. Platinum       
rose 1.68 percent at $916.65 per ounce, set to end the week up
1.5 percent.

 (Additional reporting by Nithin Prasad and Arpan Varghese in
Bengaluru; Editing by Jon Boyle and Sandra Maler)
  

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