* Gold wilts as dollar benefits from hawkish Fed comments
* U.S. Treasuries dip as bets on interest rate hike rise
* Portugal's debt woes still simmering, underpinning gold
(Updates prices)
By Jan Harvey
LONDON, March 28 (Reuters) - Gold slipped nearly 1 percent
on Monday, pressured by a firmer dollar after hawkish comments
from a Federal Reserve official late last week, and as impetus
from violence in the Middle East petered out.
Spot gold <XAU=> was bid at $1,415.85 an ounce at 1118 GMT,
against $1,427.75 late in New York on Friday. U.S. gold futures
for April delivery <GCJ1> fell $9.90 an ounce to $1,416.30.
The precious metal rallied to a record $1,447.40 an ounce
last week as violence in the Middle East and North Africa and
re-emerging sovereign debt concerns in the euro zone prompted
risk-averse buying of gold.
But it struggled to maintain traction at that level.
"There was a lot of bad news already in the price, and
further gains were always going to be hard won," said Simon
Weeks, head of precious metals at the Bank of Nova Scotia. "The
dollar firmed up on Friday, and everything seems to have shifted
back towards the dollar, with the fears in Europe.
"We can fall back to $1,400, maybe even a bit below, and it
still looks good overall. There is still a lot of uncertainty
out there," he added. "But unless there are more black swan
events out there, I think gold will struggle on the upside."
The euro <EUR=> slipped versus the dollar early on Monday
after German Chancellor Angela Merkel's conservatives lost a key
state election. A consequently stronger dollar pressured gold,
which becomes more expensive for other currency holders as the
U.S. unit appreciates. []
The dollar benefited from comments late last week from
Federal Reserve official Charles Plosser, who said the central
bank will have to reverse its easy money policy in the
"not-too-distant future" to avoid inflation. []
Prospects that U.S. monetary policy may tighten are usually
seen to be negative for gold as a non-interest bearing asset.
TREASURIES UNDER PRESSURE
Elsewhere German government bonds fell on news the European
Central Bank plans to throw a lifeline to Ireland's ailing
banks, while U.S. Treasuries eased as investors upped interest
rate hike bets. []
Portuguese bonds meanwhile remained under pressure as the
country faced snap elections which could make it difficult for
Lisbon to finance itself ahead of bond redemptions in April and
June. [] []
VTB Capital analyst Andrey Kryuchenkov said rising concerns
over Portugal's debt are likely to limit gold's downside.
"It seems that this additional support to bullion prices is
unlikely to dissipate into (the second quarter) and is likely to
keep the downside limited should we correct lower on easing
tensions in the Middle East, North Africa region," he said.
Elsewhere a report from the U.S. Commodity Futures Trading
Commission on Friday showed speculators in gold and silver
futures and options increased their net long positions as prices
rose last week. []
Net longs, or bullish positions, under managed money in gold
futures rose nearly 3 percent in the week to March 22, while
silver's net longs also gained about 4 percent.
"Gold's ascent has ... been relatively orderly and
volatility has remained relatively low despite higher spot
prices," said UBS in a note.
"Given persistent global uncertainties, we retain our
one-month forecast at $1,450 as gold should continue to fare
well, but significant moves to the upside will require stronger
participation by investors."
Silver <XAG=> was bid at $36.66 an ounce against $37.29. The
metal rose 6.4 percent last week on gold's coat-tails, hitting
its highest since 1980 at $38.13 an ounce.
Among other precious metals, platinum <XPT=> was at
$1,726.99 an ounce against $1,742.45 and palladium <XPD=> at
$741.47 against $744.95.
(Editing by Keiron Henderson)
