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Gold down ahead of Fed minutes release

Xinhua, August 18, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as traders prepared for the release of the Fed minutes.

The most active gold contract for December delivery fell 8.1 U.S. dollars, or 0.6 percent, to settle at 1,348.8 dollars per ounce.

Traders spent the day preparing for the release of the meeting minutes from the July Federal Open Market Committee meeting, which is likely to give hints on the Fed' s thinking on the timing of an interest rate increase.

Investors believe that although the U.S. central bank has left the door open for a rate increase during 2016, a rate hike is unlikely during the year. 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 18 percent at the September 2016 meeting, 20 percent at the November 2016 meeting, and 54 percent at the December meeting.

Strength in U.S. equities also put pressure on the precious metal as the U.S. Dow Jones Industrial Average rose by 23 points, or 0.12 percent as of 1700 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.

Weakness in the U.S. dollar prevented the precious metal from falling further as the U.S. Dollar Index fell by 0.11 percent to 94.68 as of 1700 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 looking to the release of the weekly jobless claims report and Philadelphia Fed Outlook on Thursday for further hints on the direction of the U.S. Economy.

Silver for September delivery fell 22.6 cents, or 1.14 percent, to close at 19.648 dollars per ounce. Platinum for October delivery dropped 9.4 dollars, or 0.84 percent, to close at 1,114.7 dollars per ounce. Enditem