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Gold down on stronger U.S. data

Xinhua, September 16, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Thursday as strong U.S. data put pressure on the precious metal.

The most active gold contract for December delivery fell 8.1 U.S. dollars, or 0.61 percent, to settle at 1,318 dollars per ounce.

Gold was put under pressure as a report released on Thursday by the U.S. Department of Labor showed initial jobless claims increasing by a smaller-than-expected 1,000 to a 260,000 initial claims level.

Analysts note that this result was yet again better-than-expected, and put pressure on the precious metal as the report continued to build positive employment expectations, which the hawks on the U.S. Federal Reserve have continued to enjoy.

The producer price index (PPI) report, also released by the U.S. Department of Labor showed the PPI remaining flat for the month of August, but the PPI less food and energy measure increased by 1.0 percent in the year-over-year change. Analysts note that although the PPI remained unchanged, the year-over-year increase is also positive news for the Fed' s hawks.

The precious metal was put under further pressure as the Philadelphia Fed Business Outlook Survey report released by the Philadelphia Federal Reserve showed its General Business Conditions Index increasing to a level of 12.8, which analysts note is far above the high-end consensus of 4.9.

Although this new positive U.S. data gives strength to the Fed's hawks, some investors speculate that the U.S. Federal Reserve will be in favor of increasing its key interest rate during the new year. However, expectations remain 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 12 percent at the September 2016 meeting, 19 percent at the November 2016 meeting, and 46 percent at the December meeting.

Gold was prevented from falling further as the U.S. Dollar Index fell by 0.04 as of 1845 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 fell 2.5 cents, or 0.13 percent, to close at 19.041 dollars per ounce. Platinum for October delivery dropped 7.1 dollars, or 0.68 percent, to close at 1,033.80 dollars per ounce. Endit