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1st LD Writethru: Gold falls as global stocks bounce back

Xinhua, January 20, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange retreated on Tuesday as global markets traded higher amid expectations of further stimulus measures from Beijing after data showed China's slowest economic expansion since 1990.

The most active gold contract for February delivery fell 1.6 U.S. dollars, or 0.15 percent, to settle at 1,089.10 dollars per ounce.

China's economy grew 6.9 percent year on year in 2015, in line with the official target of around 7 percent for the year, according to the data from the National Bureau of Statistics released on Tuesday. It is China's slowest economic growth in 25 years.

The precious metal came under pressure as the data raise investors' expectations that Beijing will roll out new stimulus.

Chinese shares soared on Tuesday and regained the 3,000-point mark. The Shanghai index gained 3.22 percent to close at 3,007.74 points. The smaller Shenzhen index climbed 3.41 percent to close at 10,501.79 points.

Gold was cushioned from falling further as the U.S. Dow Jones Industrial Average fell 0.16 percent as of 18:00 GMT. Analysts noted that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven.

Meanwhile, the U.S. Dollar Index, a measure of the dollar against a basket of major currencies, fell by 0.17 to 98.93 as of 18:00 GMT. Gold and the dollar typically move in opposite directions.

The long-term trend for gold, analysts said, remains strongly bearish as the Fed began the first of its interest rate hikes came in December, despite expectations for a delay until 2016.

Some analysts believed that the Fed may increase its key interest rate until March. 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.

Silver for March delivery rose 22.5 cents, or 1.62 percent, to close at 14.121 dollars per ounce. Platinum for April delivery added 2.8 dollars, or 0.34 percent, to close at 830.30 dollars per ounce. Enditem