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Gold rises as weak US data dampens rate hike expectations

PROSPECTING GOLD
AP

Gold rose on Monday as U.S. political turmoil, a successful missile test by North Korea and a worldwide cyber attack fueled demand for bullion as a safe haven, while weaker than-expected U.S. data pushed the U.S. dollar and bond yields lower.

Spot gold was up 0.12 percent at $1,229.18 an ounce, on track for a third day of gains after hitting an 8-week low of $1,213.81 last week.

U.S. gold futures for June delivery were $2.30 higher to settle at $1,230 an ounce.

"Continued unpredictability of the Trump administration, North Korea flexing its muscles again and weaker data coming from the U.S. has helped bring back some interest," said Ole Hansen, head of commodities strategy at Saxo Bank.

Worse-than-expected U.S. data reduced expectations of aggressive interest rate hikes by the U.S. Federal Reserve this year, though traders still expect a rise in June.

Higher interest rates mean bond yields rise and tend to boost the dollar, putting pressure on gold prices.

"Unless there is more stronger data, more than two rate hikes are not very likely (this year)," said Argonaut Securities analyst Helen Lau.

Saxo Bank's Hansen said gold's gains could end a liquidation of long positions that helped push it to last week's lows.

Money managers' net longs in COMEX gold fell to the lowest in six-weeks in the week ended May 9.

Gold demand has meanwhile strengthened in China and India, supporting prices.

In other precious metals, silver was up 1.10 percent at $16.64 an ounce. The net long in silver fell to the smallest since February 2016 from a record high last month.

"That could indicate that most of the selling pressure in silver is now over," said Hansen.

Platinum was up 1.12 percent at $927.25. The metal used for jewelry and emission-controlling catalytic converters in diesel vehicles has gained more than 4 percent from a 4 1/2-month low of $889.10 on May 4.

The World Platinum Investment Council said on Monday a market deficit would shrink sharply this year as demand falls and low prices discourage investment. Thomson Reuters GFMS said weak mine output would push platinum above $1,000 an ounce this year.

Palladium was 1.33 percent lower at $795.15 an ounce.