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Gold up on technical bounce

Xinhua, October 11, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Monday on a technical bounce during thin holiday trading.

The most active gold contract for December delivery rose 8.5 U.S. dollars, or 0.68 percent, to settle at 1,260.4 dollars per ounce.

Volume was thin and news was light due to U.S. banks closing for the Columbus Day holiday. A technical bounce provided support to the precious metal as analysts noted that gold futures rose above the 200-day moving average line.

The outlook for the precious metal remains bleak for long traders as many investors believe that the looming rate hike, stronger U.S. economy, and diminishing concern over the U.S. presidential election will drive investors away from the precious metal' s safe haven properties.

Gold was prevented from rising further as the U.S. Dollar Index rose by 0.41 percent to 96.93 as of 1900 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 week ahead for several Fed speeches on Wednesday, along with the release of the Federal Open Market Committee (FOMC) meeting minutes from the previous meeting of the U.S. central bank. Additionally, jobless claims will be released on Thursday, and the producer price index and retail sales report will be released on Friday.

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 10 percent for the November 2016 meeting, and 70 percent at the December meeting.

Silver for December delivery rose 27.9 cents, or 1.61 percent, to close at 17.659 dollars per ounce. Platinum for 2017 January delivery added 2.8 dollars, or 0.29 percent, to close at 965.4 dollars per ounce. Endit