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Gold settles higher after Fed announcement

Xinhua, July 29, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Thursday as traders reacted to the Federal Open Market Committee (FOMC) meeting announcement from after the market's close on Wednesday.

The most active gold contract for December delivery rose 6.7 U.S. dollars, or 0.50 percent, to settle at 1,341.20 dollars per ounce.

Gold was given support as the FOMC meeting did not result in the U.S. central bank increasing the U.S. interest rate. However the FOMC statement released after the market's close on Wednesday led traders to believe that a rate hike during 2016 is still possible, as the Fed has indicated that they believe that short-term threats to economic stability are diminishing.

Traders believe 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 18 percent at the September 2016 meeting, 20 percent at the November 2016 meeting, and 44 percent at the December meeting.

Gold was given further support as a report released on Thursday by the U.S. Department of Labor showed initial jobless claims increasing by 266,000 during the week of July 23rd. Analysts note that this was worse-than-expected and drive investors to gold as a safe haven.

The precious metal was given additional support as the U.S. Dollar Index fell by 0.03 percent to 96.76 as of 18:30 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

Traders are also waiting for the release of the gross domestic product report on Friday and will look to that report for hints on the long-term economic outlook for the U.S. economy.

Silver for September delivery added 19.7 cents, or 0.99 percent, to close at 20.192 dollars per ounce. Platinum for October delivery rose 10.7 dollars, or 0.95 percent, to close at 1,138.90 dollars per ounce. Endit