Please use symbol entry at top right of page to search

PRECIOUS-Gold on backfoot as Fed officials signal more rate hikes

       * U.S. consumer price growth unchanged for July
    * Gold may test $1,767-$1,773/oz support zone - technicals

 (Recasts and updates prices)
    By Brijesh Patel
    Aug 11 (Reuters) - Gold prices retreated on Thursday from
their highest levels in more than one month, as comments by U.S.
Federal Reserve officials pointed towards further interest rate
hikes, despite signs of easing inflation in the world's largest
    Gold is highly sensitive to rising U.S. interest rates, as
they increase the opportunity cost of holding non-yielding
    Spot gold        was down 0.3% at $1,786.79 per ounce, as of
0712 GMT, after hitting its highest since July 5 at $1,807.79 on
    U.S. gold futures        dipped 0.6% to $1,802.10.
    "Following U.S. inflation numbers, the dollar sold off very
sharply and yields also dropped, but by the end of the day, the
bond yields came back up..., which is hurting gold," said Edward
Meir, an analyst with ED&F Man Capital Markets.
    "Also, Fed officials said they still need to raise rates,
which are bearish for gold. We could see a pullback in gold
prices in the short-term towards $1,780."
    Benchmark U.S. 10-year Treasury yields             rebounded
to 2.7910%, after dropping as low as 2.6740% on Wednesday.

    Data showed U.S. consumer prices did not rise in July due to
a sharp drop in the cost of gasoline, lifting hopes that the Fed
would be less aggressive on its tightening plans going forward.

    However, Fed policymakers noted that they would continue to
tighten monetary policy until price pressures were fully broken.

    Limiting gold's losses, the dollar        was down 0.1%
against its rivals after falling to a 1-1/2 month low in the
last session.
    On the technical front, spot gold may test a support zone of
$1,767 to $1,773 per ounce, a break below could open the way
towards $1,756, according to Reuters technical analyst Wang Tao.

    Elsewhere, spot silver        eased 0.3% to $20.53 per
ounce, platinum        rose 1% to $951, and palladium        was
steady at $2,240.64.

 (Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi
Aich, Sherry Jacob-Phillips and Subhranshu Sahu)

Copyright © Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

News, commentary and research reports are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.