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1st LD Writethru: Gold down on positive U.S. data, stronger dollar

Xinhua, November 5, 2015 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell Wednesday as a stronger U.S. dollar and positive U.S. economic data put pressure on the precious metal.

The most active gold contract for December delivery lost 7.9 U.S. dollars, or 0.71 percent, to settle at 1,106.2 dollars per ounce.

Several measures of the U.S. economy released Wednesday showed strength, putting pressure on gold. First, a report released by U.S.-based Automated Data Processing (ADP) showed a predicted increase of 182,000 in private payrolls, which was in line with analysts' expectations.

In addition to the ADP report, the U.S.-based Institute for Supply Management showed its non-manufacturing index came in above expectations, rising to a much higher-than-expected 59.1. Analysts noted that export orders increased to 54.5, a sign of strength for U.S. firms.

The positive data in both of these reports increased expectations for the Federal Reserve to raise the U.S. interest rate during its December Federal Open Market Committee (FOMC) meeting. CMEGroup's Fedwatch tool showed the current implied probability for a rate hike at 60 percent in December, compared to 50 percent earlier in the month, and 30 percent over the past couple of months.

U.S. Fed Chairwowan Janet Yellen testified before the U.S. Congress Wednesday, but analysts do not believe her testimony will change expectations for a December rate hike. Expectations were originally for a delay in the rate hike until 2016 but the FOMC meeting in late October confirmed that the Fed wants to raise 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.

The rising U.S. Dollar Index also put pressure on the precious metal Wednesday.

Silver for December delivery fell 18.1 cents, or 1.19 percent, to close at 15.058 dollars per ounce. Platinum for January delivery lost 7.4 dollars, or 0.77 percent, to close at 954.8 dollars per ounce. Endit