PRECIOUS-Gold headed for worst one-day drop in a month as dollar, equities rise

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* Bullion down for the third straight session running

* U.S. housing starts increase more than expected in April

* Spot gold expected to test resistance at $1,307 -technicals

By Brijesh Patel

May 16 (Reuters) - Gold prices were set for a third sessionof declines on Thursday, as the dollar strengthened after therelease of strong economic data from the United States and asglobal stocks advanced.

Spot gold XAU= slipped 0.7% to $1,288.03 per ounce as of11:07 a.m. EDT (1507 GMT). Prices were on track for theirbiggest percentage decline since April 16.

U.S. gold futures GCcv1 fell 0.8% to $1,287.82 an ounce.

"Firmer dollar is putting pressure on gold, also equitymarkets continuing to bounce off from the recent lows is takingaway some safe-haven bids," said David Meger, director of metalstrading at High Ridge Futures, adding that gold is facing atechnical pullback

The dollar index .DXY rose to its highest levels in nearlytwo weeks against a basket of currencies after strong economicdata out of the United States.

The U.S. housing data showed homebuilding increased morethan expected in April, while unemployment benefits fell morethan expected last week, pointing to sustained labor marketstrength that should underpin the economy. urn:newsml:reuters.com:*:nLNSGGEF41urn:newsml:reuters.com:*:nLNSGGEF42

Better-than-expected U.S. data coupled with upbeat corporateearnings lifted Wall Street and risk sentiment among investors,in turn denting appeal for the safe-haven bullion. MKTS/GLOB

On the technical side, the $1,300 barrier has proved acrucial pivot for bullion, analysts said.

"The gold bulls and bears are on a level overall near-termtechnical playing field. First resistance is seen at $1,300 andthen at this week's high of $1,304.20," said Jim Wyckoff, senioranalyst at Kitco, in a note.

Spot gold is expected to test resistance at $1,307, a breakabove which could lead to a gain to $1,322, said Reuterstechnical analyst Wang Tao. urn:newsml:reuters.com:*:nL4N22S0VM

Meanwhile, Trump administration's move to blacklist Chinesetelecom company Huawei have added further pressure on tradetensions between Washington and Beijing. urn:newsml:reuters.com:*:nL2N22R0TCurn:newsml:reuters.com:*:nL2N22R16X

"A U.S.-China trade theme continues in the worldmarketplace: one day the two sides are upbeat on a deal gettingdone; the next day their tone is sour. Such will keep themarkets very uncertain on the matter," Wyckoff wrote in a note.

SPDR Gold TrustGLD , the world's largest gold-backedexchange-traded fund, said holdings fell 0.4% to 733.23 tonneson Wednesday. Holdings are now close to their lowest levelssince Oct. 9. GOL/ETF

Among other metals, silver XAG= was down 0.4 % at $14.74an ounce while platinum XPT= fell 0.2% to $843.65.

Palladium XPD= lost 1% to $1,331.30 and has slumped byabout 17 percent since the metal used in catalytic converters incar exhaust systems scaled a record peak of $1,620.53 in March. (Reporting by Brijesh Patel in Bengaluru; editing by JonathanOatis) ((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 8485832, Outside U.S. +91 8067493865; Reuters Messaging:Brijesh.Patel1.thomsonreuters.com@reuters.net))

This article appears in: Stocks , World Markets , Politics
Referenced Symbols: GLD ,

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