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

Xinhua, February 4, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Wednesday as weaker U.S. dollar gave support to the precious metal.

The most active gold contract for April delivery increased 14.1 U.S. dollars, or 1.25 percent, to settle at 1,141.30 dollars per ounce.

The U.S. Dollar Index, a measure of the greenback against a basket of major currencies, fell by 1.76 percent to 97.08 as of 1755 GMT. Gold and the dollar typically move in opposite directions.

Gold was put under pressure as the U.S. Dow Jones Industrial Average fell by 0.4 percent as of 1755 GMT. Analysts note that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when U.S. equities post gains.

The past couple of weeks have resulted in high gold prices as global and U.S. equity markets have taken a beating due to the plunging price of oil.

Despite the economic instability, gold was weighted slightly as a report released on Wednesday by U.S.-based Automated Data Processing showed its employment report, which serves as a forecast for the big jobs report due Friday, coming in at a reading of 205,000, which analysts note is better than expected.

The pressure remains on for the long term as during the January Federal Open Market Committee (FOMC) meeting, the central bank hinted that it could still raise rates in March.

The market remains unsure of when the next rate hike, from a 0.50 rate to a 0.75 rate will occur. However, traders are wagering that, at the earliest, the Fed may raise rates from 0.50 to 0.75 during the April FOMC meeting.

According to the CMEGroup's Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 12 percent for the March meeting, and 16 percent at the April meeting.

Silver for March delivery rose 44.5 cents, or 3.11 percent, to close at 14.734 dollars per ounce. Platinum for April delivery added 24.4 dollars, or 2.85 percent, to close at 880.10 dollars per ounce. Endit