PRECIOUS-Gold rises as weak U.S. data dampens rate hike expectations

* U.S. dollar falls, U.S. bond yields at one-week low
* Gold net long falls to six-week low
* Silver net long at its lowest since February 2016

(Updates prices, adds Johnson Matthey platinum forecast)

May 15 Gold rose as U.S. political turmoil, a
missile test by North Korea and a worldwide cyber attack fuelled
demand for safe-haven assets, while weaker than expected U.S.
data pushed the dollar lower, making gold cheaper for holders of
other currencies.
Spot gold was up 0.4 percent at $1,233.69 an ounce at
1348 GMT on Monday, on track for a third day of gains after
hitting an eight-week low of $1,213.81 last week. U.S. gold
futures gained 0.5 percent to $1,233.60.

“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 has reduced expectations of
aggressive interest rate increases by the U.S. Federal Reserve
this year, though traders still expect a rise in June.

Higher interest rates tend to boost the dollar and push bond
yields up, putting pressure on gold prices by increasing the
opportunity cost of holding non-yielding bullion.

U.S. bond yields fell sharply on Friday and remain at
one-week lows.

“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 that gold’s gains could end a
liquidation of long positions that helped to push it to last
week’s lows.

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

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

In other precious metals, silver was up 1.8 percent
at $16.75 an ounce. The net long in silver fell to its smallest
since February 2016 from a record high last month.

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

Platinum was up 1.9 percent at $934.44. The metal
used for jewellery and emission-controlling catalytic converters
in diesel vehicles has gained more than 5 percent from a 4
1/2-month low of $889.10 on May 4.

The World Platinum Investment Council said on Monday that a
market deficit would shrink this year as demand falls and low
prices discourage investment, while autocatalyst maker Johnson
Matthey said that 2017 would bring the first surplus in six
years.

Weak mine output will push platinum above $1,000 an ounce
this year, Thomson Reuters GFMS said last week.

Palladium rose 0.9 percent to $813.48 an ounce.

By Peter Hobson
5/15/2017