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

Xinhua, March 5, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose Friday as the U.S. dollar showed weakness.

The most active gold contract for April delivery rose 12.5 U.S. dollars, or 0.99 percent, to settle at 1,270.70 dollars per ounce.

Gold was given support as the the U.S. Dollar Index fell by 0.34 to 97.32 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.

An international trade report released by the U.S. Department of Commerce showed that exports fell 2.1 percent and imports dropped 1.3 percent. Both figures were worse than expected, resulting in a trade imbalance of 45.7 billion U.S. dollars.

The precious metal was put under pressure as a report released by the U.S. Department of Labor showing better than expected employment in the U.S. economy. Nonfarm payrolls rose by 242,000 during the month of February. However, analysts note that the report shows a 0.1-percent decline in average hourly earnings, but this comes in the wake of a 0.5 percent gain during the month of January, which was better-than-expected.

Analysts believed that a delay in the U.S. Federal Reserve's rate hike remains inevitable due to economic instability.

Prior to Fed Chairwoman Janet Yellen's address to the U.S. Congress on Feb. 10, the central bank hinted that it could still raise rates in March. However, Yellen later testified to Congress that the increases would be gradual, many analysts believe that the next rate hike, from a 0.50 rate to a 0.75 rate will occur much later in the year.

Traders are wagering that, at the earliest, the Fed may raise rates from 0.50 to 0.75 during the April Federal Open Market Committee (FOMC) meeting. According to the CMEGroup's Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 18 percent at the April 2016 meeting, and 36 percent at the June 2016 meeting.

Silver for May delivery rose 54.8 cents, or 3.62 percent, to close at 15.694 dollars per ounce. Platinum for April delivery added 43.6 dollars, or 4.63 percent, to close at 986.30 dollars per ounce. Endit