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

Xinhua, November 24, 2015 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Monday as the U.S. dollar strengthened.

The most active gold contract for December delivery fell 9.5 U.S. dollars, or 0.88 percent, to settle at 1,066.80 dollars per ounce.

Gold was put under pressure as the U.S. Dollar Index, a measure of the greenback against a basket of major currencies, rose by 0.17 percent to 99.85 as of 1800 GMT. Gold and the dollar typically move in opposite directions.

Analysts believe that the market is still pricing in the much anticipated rate hike during the December Federal Open Market Committee (FOMC) meeting.

The CMEGroup's Fedwatch tool shows the implied probability of a rate hike rising by 4 percent to 74 percent, which is much higher than the recent registered 68 percent.

Expectations were originally for a delay in the rate hike until 2016 but the FOMC meeting in late October left the door open for the Fed to raise rates before the end of 2015.

Traders are turning their eyes to the GDP data to be released on Tuesday, as positive employment numbers have led many to speculate that December will likely be the month that the Fed raises rates.

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.

A report released on Monday by the U.S.-based National Association of Realtors prevented gold from falling further as it showed sales of existing homes falling by 3.4 percent during October to a lower-than-expected annualized rate of 5.36 million.

Analysts note that while this report may be worse than expected, the lack of supply due to low prices in the housing market is keeping prices artificially low.

Gold got additional support as a report released by the U.S.-based Markit Economics showed U.S. PMI manufacturing flash at a worse-than-expected level, falling to 52.6 in November, the lowest reading since October 2013.

Analysts believe that neither of these two reports is likely to impact gold in the long term, and that the outlook for the precious metal remains bearish as the U.S. Federal Reserve is likely to raise rates during the December FOMC meeting.

Silver for March delivery fell 6.4 cents, or 0.45 percent, to close at 14.032 dollars per ounce. Platinum for January delivery dropped 8.5 dollars, or 0.99 percent, to close at 847.40 dollars per ounce. Endit