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Gold up ahead of Fed announcement

Xinhua, July 28, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Wednesday ahead of the U.S. Federal Reserve's Federal Open Market Committee (FOMC) announcement.

The most active gold contract for August delivery rose 5.9 U.S. dollars, or 0.45 percent, to settle at 1,326.70 dollars per ounce.

At the meeting today, 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 CME Group's Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 4 percent for the July meeting, 27 percent at the September 2016 meeting, 29 percent at the November 2016 meeting, and 49 percent at the December meeting.

Strength in the U.S. dollar also put pressure on the precious metal as the U.S. Dollar Index rose by 0.29 to 97.46 as of 18:00 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.

Gold was given support as the U.S. Department of Commerce said on Wednesday that durable goods orders fell 4 percent in June, which analysts noted is the largest drop in nearly two years.

The negative figure sent traders to the precious metal as a safe haven ahead of the U.S. Federal Reserve's FOMC announcement.

Silver for September delivery rose 31.2 cents, or 1.59 percent, to close at 19.995 dollars per ounce. Platinum for October delivery added 29.2 dollars, or 2.66 percent, to close at 1,128.20 dollars per ounce. Endit