Gold dips, off one-week high after strong US data

[NEW YORK] Gold dipped slightly on Thursday, easing off a one-week high as the dollar rebounded following strong US retail sales data, while palladium rose to its highest since February 2001.

US retail sales increased more than expected in November as the holiday shopping season got off to a brisk start.

"We have not seen this strong pace of strength for the US retail sales data since 2012," said Naeem Aslam, chief market analyst at Think Markets UK.

Spot gold dipped 0.03 per cent to US$1,255.77 per ounce by 2.43pm EST (1943 GMT). In early trading it touched a one-week high of US$1,259.11.

US gold futures for February delivery settled up US$8.50, or 0.7 per cent, at US$1,257.10 per ounce.

Palladium was up 1.4 per cent at US$1,030.80 an ounce. Earlier, it hit a 16-1/2-year high, jumping 2 per cent to US$1,038 an ounce.

Strong US retail sales data boosted the dollar, making dollar-denominated bullion more expensive for holders of other currencies.

"Many went into yesterday's Fed meeting with an expectation for more (interest) rate hikes as opposed to less," said David Meger, director of metals trading at High Ridge Futures in Chicago. "This was a technical retracement off yesterday's highs."

The spot gold price rallied to US$1,256.87 on Wednesday after the Fed raised its benchmark interest rates and projected three more hikes in each of 2018 and 2019, which was expected.

Gold is sensitive to rising rates because they push up bond yields, reducing the appeal of non-yielding bullion. Rising interest rates also tend to boost the dollar, making gold more expensive for holders of other currencies.

The US economic data was released after both the European Central Bank and the Bank of England kept rates unchanged.

"Today, spot gold is still significantly higher than where we were going into the Fed meeting yesterday," Mr Meger said.

Prior to the Fed decision, spot gold had fallen to US$1,239.98 an ounce.

While US tax reform uncertainty may support gold, there were also risks bullion could revisit its range bottom close to US$1,200, said Jonathan Butler, commodities analyst at Mitsubishi in London, due to a continued increase in US stocks and unconventional assets including crypto currencies.

Platinum dipped 0.7 per cent at US$878.80 an ounce, earlier reaching a 6-day high of US$891.20.

Silver fell 0.8 per cent to US$15.93 an ounce, after hitting a five-month low of US$15.59 in the previous session.

REUTERS