Gold falls on profit taking

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Friday as profit taking put pressure on the precious metal.

The most active gold contract for December delivery fell 3 U.S. dollars, or 0.22 percent, to settle at 1,341.7 dollars per ounce.

Profit taking was the feature of the day as speculators exited trading positions after policy adopted at the Federal Open Market Committee (FOMC) meeting drove the precious metal higher.

The U.S. Federal Reserve on Wednesday kept its federal funds rate unchanged amid recent weak economic data and tepid inflation. But it strongly signaled that the central bank could have one rate hike by the end of this year, despite three hawkish members voting against it.

Investors 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 12 percent for the November meeting, 54 percent at the December meeting, and 57 percent at the February meeting.

The precious metal was given support as Markit's PMI Manufacturing Index flash released on Friday fell to 51.4, which was below the lowest level of the consensus range of expectations.

Analysts note that September was a weaker-than-expected month for manufacturing and that the factory sector has weak hiring, a decreasing inventory, and lower selling prices.

A stronger greenback put pressure on the precious metal. The U.S. Dollar Index, a measure of the dollar against a basket of major currencies, rose by 0.09 percent to 95.46 as of 1930 GMT.

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 28.9 cents, or 1.44 percent, to close at 19.81 dollars per ounce. Platinum for October delivery dropped 5.8 dollars, or 0.55 percent, to close at 1,057.00 dollars per ounce. Endit