Gold hits 4-week low on firm dollar

USA gold futures GCcv1 settled down 0.8 percent at $1,246.70.New York Federal Reserve President William Dudley said US inflation is a little low but should rise alongside wages as the labour market improves, allowing the Fed to continue gradually tightening USA monetary policy.The potential for higher rates reinforced the uptrend in the dollar.DXY, which, when it rises, makes dollar-denominated commodities more expensive for holders of other currencies, potentially weakening demand.

"If we're right in our view that U.S. rates will track higher in the second half, then downward pressure in the yen should continue, given the BoJ's yield curve control policy which ensures widening global-Japan bond yield spreads", Wong said. The biggest, SPDR Gold Trust HLDSPDRGT=XAU, saw holdings decrease by 1.5 percent last week, the biggest weekly outflow in three months.

"From a technical standpoint you know there are throngs of investors probably sitting on the sidelines watching that tech rally, wanting to be part of it", said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

It was Amazon's first major brick-and-mortar acquisition in the sector and already struggling retailers were hit hard by the prospect of having a well-known disruptor as a competitor. The U.S. dollar gained to 0.9754 Swiss franc from 0.9736 Swiss franc, and it moved up to 1.3223 Canadian dollars from 1.3217 Canadian dollars.

Elsewhere, palladium was up 0.6 percent at $865.8 an ounce.

The market is looking to comments by New York Fed President William Dudley for potential support for the greenback.

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The dollar index, which gauges the dollar against six other currencies, was up 0.4 percent at 97.537.

The yield on the 10-year Treasury note gained 3.1. basis points at 2.188%, while the yield on the 30-year Treasury bond, known as the long bond, ticked up 0.5 basis point to 2.787%.

"The market is still sceptical that the Fed will hike rates again this year, with the probability of a rate hike before year-end now sitting around 45 per cent", BNZ currency strategist Jason Wong said.

The stronger dollar weighed on gold prices, but losses were curbed by uncertainty as talks commenced on the terms of Britain's departure from the European Union.

Oil prices gave up early gains and turned negative as rising production in the United States, Libya and Nigeria have foiled an OPEC-led effort to support the market by cutting production. Australian shares .axjo climbed 0.5 percent and South Korea's KOSPI .ks11 jumped 0.6 percent.

"This is actually a pretty good place to be" with unemployment at 4.3 percent and inflation at about 1.5 percent, Dudley told the North Country Chamber of Commerce in Plattsburg, New York.

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