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1st LD Writethru: Gold up on weaker U.S. dollar

Xinhua, November 20, 2015 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Thursday as the U.S. dollar weakened.

The most active gold contract for December delivery rose 9.2 U.S. dollars, or 0.86 percent, to settle at 1,077.90 dollars per ounce.

Gold was given support as the U.S. dollar decreased against other major currencies on Thursday after hitting a seven-month high in the previous two sessions.

The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

The U.S. Federal Reserve released the minutes from their previous Federal Open Market Committee in October, which indicated that most Fed officials believed a December rate hike is likely appropriate.

The CMEGroup's Fedwatch tool showed the implied probability of a December rate hike rising from 68 percent to 72 percent, preventing the precious metal from rising further.

Another reason for Thursday's rise is short traders are in the process of covering their shorts, hedging bets for the December rate hike.

Expectations were originally for a delay in the rate hike until 2016, but the FOMC meeting in late October sent out a strong signal for a December rate hike.

An increase in the Fed's interest rate drives investors away from gold and toward 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 U.S. Department of Labor's weekly jobless claims report showed claims falling by 5,000 to 271,000 which is in line with market estimates.

Analysts noted that the report on its own would be neutral to gold, but if combined with continually positive jobs reports, it will raise the likelihood of the U.S. Federal Reserve raising interest rates in December.

Silver for December delivery was up 14.1 cents, or 1.00 percent, to close at 14.222 dollars per ounce. Platinum for January delivery advanced 10.1 dollars, or 1.19 percent, to close at 858.10 dollars per ounce. Endit