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1st LD Writethru: Gold higher on weaker U.S. dollar, short covering

Xinhua, January 14, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange went up on Wednesday on a weaker U.S. dollar and short covering.

The most active gold contract for February delivery added 1.9 U.S. dollars, or 0.18 percent, to settle at 1,087.10 dollars per ounce.

Gold was given support as the U.S. Dollar Index fell by 0.1 to 98.92 as of 19:00 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.

Traders also exited short positions, giving further support to the precious metal ahead of economic data to be released with jobless claims on Thursday, and Producer Price Index, retail sales, and industrial production due out on Friday.

The Fed will be watching closely these economic reports as it started interest rate hike from December. Some analysts believe that the Fed may increase its key interest rate at the next Federal Open Market Committee (FOMC) meeting in March. 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.

Gold was given further support as the Dow Jones Industrial Average fell 2.09 percent. Analysts note that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven.

Silver for March delivery increased 40.5 cents, or 2.95 percent, to close at 14.156 dollars per ounce. Platinum for April delivery added 12.7 dollars, or 1.51 percent, to close at 851.30 dollars per ounce. Endit