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

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as positive U.S. economic data gave strength to the U.S. dollar.

The most active gold contract for February delivery fell 5.8 U.S. dollars, or 0.54 percent, to settle at 1,068.30 dollars per ounce.

Personal spending increased 0.3 percent in November and income increased 0.3 percent, with wages increasing by 0.5 percent in November, following a 0.6 percent gain in October, according to another report released by the Commerce Department Wednesday. The better-than-expected data put gold under pressure.

The precious metal was also put under a very slight amount of pressure as a report released on Wednesday by the U.S. Department of Commerce showed new home sales increasing by 4.3 percent in November to an annualized rate of 490,000.

Analysts said that despite the increase, this figure, though lower-than-expected, may still be seen considered as a positive sign as an increase in construction brought additional supply into the housing sector, helping lift new home sales.

The U.S. dollar index rose on Wednesday by 0.24 percent to 98.46 as of 17:30 GMT. 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.

Gold's rise was stemmed by a report released by the U.S. Department of Commerce showed durable goods orders holding unchanged, and orders excluding transportation fell to negative 0.1 percent. Analysts note weak exports and lower energy-related demand have led to the sector's softness in most of 2015.

The long-term trend for gold remains strongly bearish according to analysts as the Fed hiked its interest rate in December, which came despite expectations for a delay in the rate hike until 2016.

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. Until the December FOMC meeting there had not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

Analysts believe the goal of the Fed is to soak up some of the banks' 2.5 trillion U.S. dollars of excess reserves as the U.S. economy begins to recover. Banks' risk appetite will increase in a bullish economy, which as a result could potentially release some of their excessive reserves, flooding the economy with cash, causing inflation.

Silver for March delivery fell 2.7 cents, or 0.19 percent, to close at 14.287 dollars per ounce. Platinum for January delivery dropped 4.9 dollars, or 0.56 percent, to close at 868.10 dollars per ounce. Enditem