PRECIOUS-Gold falls as China rate cut fuels Fed expectations – Reuters


* Gold falls, as China rate cut could ease way for Fed hike

* Prices pressured by dollar; upbeat PMI data boosts
currency

* Gold on course for weekly loss, snapping two weeks of
gains

(Recasts, adds comment, updates prices)

By Mariana Ionova

LONDON, Oct 23 (Reuters) – Gold fell on Friday after the
dollar soared to its highest in more than two months and China
eased monetary policy for the sixth time in a year, reviving
expectations for a U.S. rate rise.

Spot gold slid 0.3 percent to $1,162.35 an ounce by
1457 GMT. The metal had earlier rallied to a session-high of
$1,179.40, in tandem with global markets after China cut
interest rates.

But gains were brief, as China’s move fuelled expectations
that the United States may tighten monetary policy this year.

“The China cut removes some of the pressure on major central
banks to deliver further easing or postpone rate hikes,” said
Jens Pedersen, analyst at Danske Bank. “For the Fed next week,
the Chinese headache will be slightly less.”

Gold had fallen to 5-1/2 year lows in recent months on
expectations the Fed will raise rates this year, potentially
lifting the opportunity cost of holding non-yielding bullion.

Concerns over the health of the global economy have recently
pushed back expectations into 2016. But further stimulus in
China and upbeat U.S. data have increased the likelihood of a
December rate rise.

Gold was further pressured by the dollar, which rose to its
highest since Aug. 19 against a basket of currencies.

Better-than-expected manufacturing figures for October
supported the currency. U.S. flash manufacturing PMI rose to its
highest since March, beating expectations for a slight decline
from the previous month.

A stronger dollar weighs on gold by making the metal more
expensive for holders of other currencies.

Friday’s slide deepened losses from the previous session,
when gold fell to its weakest since Oct. 13. The metal was on
course to lose 1.2 percent this week, snapping a two weeks of
gains.

Gold is expected to keep edging down into next year. Goldman
Sachs estimates prices at $1,100 in three months, $1,050 in six
months and $1,000 in 12 months.

“The long-term outlook is still framed by ongoing, although
slow, global recovery,” said Norbert Ruecker, head of commodity
research at Julius Baer.

Technicals pressured further, as gold slipped from the
200-day moving average of about $1,174, after briefly breaking
through it earlier in the day.

The metal recently broke through the resistance level for
the first time since May, holding near it for six sessions.

Silver was down 0.1 percent at $15.80 an ounce,
platinum dipped 0.5 percent to $1,000.50 and palladium
gained 1.4 percent to $692.22.

(Editing by David Clarke and David Evans)