June 1, 2017 / 4:20 AM / in a year

PRECIOUS-Gold holds near five-week highs, but potential U.S. rate hike weighs

    * YouGov poll shows PM May losing majority in UK elections
    * Spot gold may retrace to $1,257 per ounce- technicals
    * Palladium close to four week highs hit on Wednesday

 (Updates prices, adds quotes)
    By Vijaykumar Vedala
    June 1 (Reuters) - Gold edged lower on Thursday but held
near the five-week highs hit in the previous session, as
expectations that the U.S. Federal Reserve will hike interest
rates this month weighed on prices but geopolitical concerns
provided some support.
    Spot gold        was down 0.2 percent at $1,266.08 per ounce
at 0421 GMT. On Wednesday, it touched a session high of
$1,273.74 an ounce, its strongest since April 25.   
    U.S. gold futures         fell 0.5 percent to $1,265 an
    "Market participants are cautious ahead of the Federal Open
Market Committee meeting next month... There is a lot of
uncertainty on what the Fed will do," said Hareesh V, head of
research at Geofin Comtrade Ltd. 
    San Francisco Federal Reserve Bank President John C.
Williams said on Wednesday that three rate increases are most
likely this year. However, some recent soft U.S. economic data
has raised questions whether the Fed will stay with that plan.
    "Continued geopolitical concerns and jitters across global
equities are supporting the price action currently," Sam
Laughlin, senior precious metals trader at MKS, said in a note. 
    "However investors are likely to hold off instigating fresh
positioning until we are through U.S. jobs data on Thursday (ADP
employment) and Friday (non-farm payrolls)."             
    Positive payroll data from the United States could mean the
Fed will raise rates as expected at its June 13-14 meeting.
Traders believe there is an 87 percent chance of a rate rise,
according to CME Group's FedWatch tool.                 
    In Britain, Prime Minister Theresa May could lose control of
the parliament in the June 8 election, according to a projection
by polling company YouGov, raising the prospect of political
turmoil just as formal talks for the country to leave the
European Union begin.             
    Spot gold may retrace to $1,257 per ounce, as it failed to
break a resistance at $1,272, according to Reuters technical
analyst Wang Tao.             
    President Donald Trump's decision on Thursday on whether the
United States will continue to be part of the global pact to
fight climate change will also be keenly watched, analysts said.
    "A withdrawal in itself shouldn't be bearish for the U.S.
dollar in isolation; rather it is the intent that it signals,"  
  said Jeffrey Halley, a senior market analyst at OANDA. 
    "In this case a more isolationist stance from literally, the
rest of the world's view. This could see that geopolitical
temperature gauge rise again, taking gold with it."
    Among other precious metals, silver        fell 0.1 percent
to $17.27 an ounce. 
    Platinum        was unchanged at $943.50 an ounce.
    Palladium       , which hit a four-week high at $821.90 an
ounce on Wednesday, was last seen down 0.4 percent at $813.50.  

 (Reporting by Vijaykumar Vedala in Bengaluru; Editing by
Christian Schmollinger and Amrutha Gayathri)
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