Gold down as traders weigh Fed decision

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Tuesday as traders hedged their bets ahead of the Federal Open Market Committee (FOMC) meeting next week.

The most active gold contract for December delivery fell 1.9 U.S. dollars, or 0.14 percent, to settle at 1,323.7 dollars per ounce.

Traders are waiting to see the Thursday release of several key economic indicators including the weekly jobless claims, the producer price index, retail sales, and industrial production reports. The consumer price index will also be released on Friday. Current expectations are 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 15 percent at the September 2016 meeting, 22 percent at the November 2016 meeting, and 59 percent at the December meeting.

Analysts note that despite the recent implied probabilities of a Fed rate hike decreasing for the two nearest FOMC meetings, the prediction that the Fed will raise rates at the December meeting has remained steady, putting pressure on the precious metal as investors are moved to more risky interest-bearing assets, driving them away from gold' s safe haven properties.

Strength in the U.S. dollar also put pressure on gold as the U.S. Dollar Index rose by 0.47 percent to 95.60 as of 1930 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.

Silver for December delivery dropped 2.5 cents, or 0.13 percent, to close at 18.975 dollars per ounce. Platinum for October delivery fell 6.9 dollars, or 0.66 percent, to close at 1,036 dollars per ounce. Enditem