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1st LD Writethru: Gold ended lower despite weak U.S. data ahead of Fed's statement

Xinhua, October 28, 2015 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell slightly Tuesday as traders hedged their bets, despite weak U.S. economic data giving support to the precious metal ahead of the U.S. Federal Reserve statement.

The most active gold contract for December delivery fell 0.4 U.S. dollar, or 0.03 percent, to settle at 1,165.80 dollars per ounce.

Traders are hedging their bets as the Fed meeting began Tuesday, putting pressure on the precious metal, but despite that pressure, gold was given support and prevented from falling lower Tuesday as a report released by the U.S. Department of Commerce showed durable goods orders falling by 1.2 percent in September, which was worse than expected. The report also revised August orders lower, showing them falling by 3.0 percent.

The precious metal was given further support as the U.S.-based Conference Board's Consumer Confidence Index showed consumer confidence falling in October to a lower-than-expected 97.6. Analysts noted that consumers say there are fewer jobs available than in September, and that this report is likely to lower expectations for the October employment report due out on Nov. 6.

October's Federal Open Market Committee (FOMC) meeting kicked off Tuesday and will end Wednesday. The U.S. central bank is currently trying to decide when to raise interest rates, and is carefully monitoring the data associated with that decision. The worse-than-expected data released Tuesday is likely to result in no decision to increase the Fed's interest rate during the meeting Wednesday. The current implied probability of an October rate hike is 5 percent, according to the CMEGroup's FedWatch tool, while the chances in September are better, at 30 percent.

Expectations were originally for a September rate increase, but due to lower-than-expected U.S. inflation and tension in global markets, expectations have been pushed back to 2016, despite Fed Chairwoman Janet Yellen's statements on Sept. 25 at the University of Massachusetts, indicating the Fed could still raise interest rates before the end of 2015. An increase in the Fed's interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

Silver for December delivery dropped 4.2 cents, or 0.26 percent, to close at 15.863 dollars per ounce. Platinum for January delivery fell 8.3 dollars, or 0.83 percent, to close at 989.20 dollars per ounce. Endit