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1st LD Writethru: Gold down ahead of Fed policy meeting

Xinhua, March 15, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Monday as U.S. equities and the U.S. dollar rose ahead of the U.S. Federal Reserve's meeting on monetary policy this week.

The most active gold contract for April delivery fell 14.3 U.S. dollars, or 1.14 percent, to settle at 1,245.10 dollars per ounce.

Gold was put under pressure as the U.S. Dow Jones Industrial Average rose by 31 points, or 0.18 percent, as of 1740 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 rise in equities comes as traders are eagerly awaiting economic reports due for release this week.

The Producer Price Index is due to be released on Tuesday, along with the retail sales report. The FOMC meeting begins on Tuesday, ending with a press conference on Wednesday, which will be preceded by the Consumer Price Index, housing starts, and industrial production reports which will come earlier in the day.

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

Prior to Fed Chair Janet Yellen's address to the U.S. Congress last week, the central bank hinted that it could still raise rates in March.

However, Yellen later testified to Congress that the increases would be gradual, and 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 22 percent at the April 2016 meeting, and 47 percent at the June 2016 meeting.

The precious metal was put under further pressure as the U.S. Dollar Index rose by 0.47 percent to 96.60 as of 1745 GMT. Gold and the dollar typically move in opposite directions.

Silver for May delivery fell 8.4 cents, or 0.54 percent, to close at 15.521 dollars per ounce. Platinum for April delivery dropped 4.3 dollars, or 0.44 percent, to close at 965.40 dollars per ounce. Enditem