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Gold down sharply on stronger U.S. equities, dollar

Xinhua, July 21, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as a stronger U.S. dollar and rallying U.S. equities put pressure on the precious metal.

The most active gold contract for August delivery fell 13 U.S. dollars, or 0.98 percent, to settle at 1,319.30 dollars per ounce.

Gold was given support on Wednesday as traders reacted to technicals, despite a stronger U.S. dollar and stronger U.S. equities.

The U.S. Dollar Index rose by 0.14 percent to 97.18 as of 19:00 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.

Stronger U.S. equities also put pressure on the precious metal as the U.S. Dow Jones Industrial Average rose by 46 points, or 0.25 percent as of 19:00 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.

Traders are waiting for the release of the weekly jobless claims report, Philadelphia Fed Business Outlook Survey, and existing home sales report on Thursday, along with the PMI Manufacturing Index Flash on Friday.

Traders believe that the Fed will delay the previously expected July interest rate increase until 2017. Previous Fed minutes led traders to believe that the Fed may raise rates from 0.50 to 0.75 during the December FOMC meeting.

According to the CMEGroup's Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 0 percent for the July meeting, 25 percent at the September 2016 meeting, 26 percent at the November 2016 meeting, and 51 percent at the December meeting.

Silver for September delivery fell 39.4 cents, or 1.97 percent, to close at 19.613 dollars per ounce. Platinum for October delivery dropped 7.1 dollars, or 0.65 percent, to close at 1,091.50 dollars per ounce. Enditem