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Gold down ahead of Fed meeting press conference

Xinhua, March 16, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Tuesday as the U.S. dollar rose ahead of the U.S. Federal Reserve Open Market Committee press conference scheduled for Wednesday.

The most active gold contract for April delivery fell 14.1 U.S. dollars, or 1.13 percent, to settle at 1,231 dollars per ounce.

The U.S. Dollar Index rose by 0.07 to 96.64 as of 17:50 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.

Despite the rise of dollar, the U.S. Dow Jones Industrial Average fell by 8 points, or 0.05 percent as of 18:50 GMT. The index is a measure of the dollar against a basket of major currencies.

The U.S. Department of Labor released a report Tuesday that showed the producer price index falling by 0.2 percent overall during the month of February, and rose by 0.1 percent in the ex-food/energy/services reading. These figures were as expected and did not contribute to a change in the price of gold, but will likely be factored into the Fed's decision making during the Federal Open Market (FOMC) Committee meeting.

Gold was given support as another report released by the Department of Labor showed retail sales weaker-than-expected with February's retail sales falling by 0.1 percent, but a big downward revision to January retail sales. January retail sales have been revised downward to 0.4 percent, compared to an initial gain of 0.2 percent.

Traders are waiting for the results of the Federal Open Market Committee to be released on Wednesday. Analysts believe the goal of the Fed is to soak up some of the banks' 2.5 trillion U.S. dollars of excess reserves as the U.S. economy begins to recover. Banks become more willing to take risks in a bullish economy, and as a result could potentially release some of their excessive reserves, flooding the economy with cash, causing inflation.

Silver for May delivery fell 26 cents, or 1.68 percent, to close at 15.261 dollars per ounce. Platinum for April delivery dropped 5.6 dollars, or 0.58 percent, to close at 959.80 dollars per ounce. Enditem