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Gold down on stronger U.S. data

Xinhua, October 4, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Monday as U.S. economic data showed strength.

The most active gold contract for December delivery fell 4.4 U.S. dollars, or 0.33 percent, to settle at 1,312.7 dollars per ounce.

The precious metal was put under pressure as the U.S.-based Institute for Supply Management released the ISM manufacturing index for the month of September, which showed it's key measure increasing to 51.5, a figure which was better-than-expected, even considering the weakness displayed during the month of August. Analysts note that this drove investors away from gold's safe haven properties and toward more lucrative investments.

The U.S. Dollar Index rose by 0.23 percent to 95.71 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.

The precious metal was prevented from falling further as the U.S. Dow Jones Industrial Average fell by 75 points, or 0.41 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.

As of Monday, 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 11 percent for the November 2016 meeting, and 62 percent at the December meeting.

Traders are looking ahead to the two Fed speeches on Tuesday, international trade report on Wednesday, weekly jobless claims report on Thursday, and the big jobs report on Friday.

Silver for Decemmber delivery dropped 34.6 cents, or 1.8 percent, to close at 18.868 dollars per ounce. Platinum for 2017 January delivery fell 25.4 dollars, or 2.46 percent, to close at 1,009.1 dollars per ounce. Endit