February 9, 2018 / 11:34 AM / 15 days ago

PRECIOUS-Gold dips on firm dollar, heads for second weekly loss

    * Gold on track for second straight weekly drop
    * Palladium heads for worst week since October 2016
    * GRAPHIC-Platinum/palladium ratio: tmsnrt.rs/1QjSZAC

 (Updates prices; adds comments, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Maytaal Angel
    NEW YORK/LONDON, Feb 9 (Reuters) - Gold slipped on Friday,
under pressure from a firmer dollar and worries about rising
global interest rates, but still found some support as a safe
haven asset as world stock markets fell.
    The U.S. dollar        rose against a currency basket,
heading for its strongest week in nearly 15 months, with major
U.S. equity indexes shedding around 1 percent a day after a
plunge that confirmed a correction for the market.            
    "Currently, there are two competing forces in the gold
market," said Walter Pehowich, executive vice president of
investment services at Dillon Gage Metals.
    "These include the investor who believes that in times of
uncertainty, gold still offers a safe haven and the speculator
who takes a short position and believes that the dollar will
strengthen along with rising interest rates." 
    Spot gold        fell 0.3 percent to $1,314.49 an ounce by
2:05 p.m. EST (1905 GMT), just above Thursday's five-week low at
$1,306.81. It was down 1.3 percent for the week so far, heading
for a second straight weekly drop.
    U.S. gold futures         settled down or 0.3 percent at
$1,315.70. 
    "It is likely that losses in stocks are causing some metal
holders to liquidate in an effort to increase their capital,"
said Miguel Perez-Santalla, vice president of Heraeus Metal
Management in New York.
    "Remaining above $1,300 on an ugly week should be viewed as
a positive signal." 
    Although the dollar had strengthened, said Ole Hansen, head
of commodity strategy at Saxo Bank, investors were watching to
see if the U.S. administration's planned tax cuts boosted the
economy. "If it doesn't, it could have a negative growth impact,
that's not going to be dollar-positive," he said.
    A strong dollar makes gold costlier for holders of other
currencies.
    The yield on benchmark 10-year U.S. Treasuries            ,
which tends to be the driver of global borrowing costs, was
around 2.8 percent, just short of Monday's four-year high of
2.885 percent.
    Rising yields increase the opportunity cost of holding
non-yielding bullion.
    Silver        fell 0.8 percent to $16.27 an ounce, having
touched its lowest since Dec. 22.
    Platinum        lost 1.4 percent at $956 an ounce, having
hit its lowest since Jan. 10. Palladium        fell 0.6 percent
to $968.90, having hit its lowest since October. It was on track
for its poorest weekly performance since October 2016.  
    "Following the recent declines, platinum and palladium are
back to parity. Given our outlook for a slowdown in global car
sales, we do not see the recent sell-off in palladium as a
buying opportunity and maintain a bearish view," said Julius
Baer in a note. 

 (Additional reporting by Nallur Sethuraman; Editing by
Marguerita Choy and Edmund Blair)
  
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