US MIDDAY: gold slips

Gold slipped on Thursday from a three-month high in the previous session after robust US economic data pointed to a stronger economy, increasing the likelihood that the Federal Reserve will raise US interest rates. The data showing rising US wholesale inventories and an unexpectedly low number of Americans filing for unemployment benefits also pushed up the dollar and US bond yields.
A stronger dollar makes gold more expensive for holders of other currencies, while higher yields increase the opportunity cost of holding non-yielding bullion. Higher interest rates would lift yields further. Spot gold was down 0.6 percent at $1,234.36 an ounce by 1619 GMT, while US gold futures dropped 0.3 percent to $1,235.50.
"If people were betting on the Fed being more relaxed and rates being lower for longer, this (data) has muddied that picture," said Robin Bhar at Societe Generale. With gold striking $1,244.67, its highest since November 11, on Wednesday, some investors had turned cautious and were cashing in their bets on higher prices, Bhar said.
Federal Reserve Chair Janet Yellen is due to appear before US senators and members of Congress on January 14 and January 15, when she will be quizzed about the US economy. Gold has risen by about 10 percent from a mid-December low as political risk in Europe and the United States has driven demand for bullion as a safe haven.
Those worries were fuelled on Thursday by official data that showed Germany's trade surplus climbed to a record high in 2016, setting the scene for conflict between Berlin and Washington after Trump's top trade adviser last week accused Berlin of exploiting a "grossly undervalued" euro to gain trading advantage. Adding support to prices, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased its bullion holdings for a sixth day on Wednesday.
"We see gold as relatively underpriced, given the rally in commodities and high level of political uncertainty," said Hamza Khan at ING. Khan said that gold could rise as high as $1,350 an ounce before too long, having seen jumps of $10 a day.
In other precious metals, platinum was up 0.6 percent at $1,020.60 an ounce. The metal used in jewellery and autocatalysts touched $1,023, its highest since October 3, earlier in the session. ING's Khan said the rally was not backed by fundamentals, but by investors betting on a broad rise in industrial metals and taking advantage of platinum's relative undervaluation to gain exposure. Spot silver fell by 0.6 percent to $17.67 an ounce, just off the $17.86 three-month high reached in the previous session. Palladium was up 0.3 percent at $770.97.