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1st LD Writethru: Gold rallies strongly on soft U.S. inflation

Xinhua, September 17, 2015 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rallied on Wednesday as U.S. consumer prices came in soft in August, which lowered expectations for a rate hike this month by the Federal Reserve.

The most active gold contract for December delivery added 16.4 U.S. dollars, or 1.49 percent, to settle at 1,119 dollars per ounce.

Data released on Wednesday showed the U.S. consumer-price index fell by 0.1 percent in August from the previous month, the first decline since January, due to cheaper gasoline. The downbeat data suggested that inflation might be short of the Federal Reserve's target levels to support a rate hike, undercutting the dollar.

The U.S. Dollar Index, a measure of the dollar against a basket of six major currencies dropped about 0.35 percent in late trading.

Gold and the dollar typically move in opposite directions, which means a weaker U.S. dollar can be a positive for commodities priced in dollars because it makes them more expensive for non-dollar users, while a stronger dollar can weigh on commodities.

The Federal Open Market Committee Wednesday kicked off its two-day policy meeting at which the Fed might raise its benchmark interest rate for the first time in more than nine years. The Fed has been keenly watching employment and inflation as two key gauges to help influence its plans for the first interest-rate hike in nearly a decade.

The Fed will release its crucial policy statement Thursday afternoon at about 2 p.m. Eastern time. Chairwoman Janet Yellen's subsequent news conference, scheduled to begin at 2:30 p.m. Eastern time.

Among other metals, silver for December delivery rose 55.9 cents, or 3.90 percent, to close at 14.885 dollars per ounce, while platinum for October delivery added 17.5 dollars, or 1.83 percent, to close at 975.7 dollars per ounce. Enditem