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Gold up on weaker U.S. dollar, data

Xinhua, October 18, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Monday as the U.S. dollar showed weakness.

The most active gold contract for December delivery rose 1.1 U.S. dollars, or 0.09 percent, to settle at 1,256.6 dollars per ounce.

The U.S. Dollar Index fell by 0.28 percent to 97.86 as of 1815 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 industrial production report released on Monday by the U.S. Federal Reserve showed production increasing by 0.1 percent, which was slightly below consensus, but within expectations. Manufacturing also increased by 0.2 percent, which was slightly above consensus, but within expectations. Analysts note strength in mining and high-tech production.

Investors believe that although the industrial production report was mixed, it gave short-term support to the precious metal, which is likely to be eliminated later this week due to the release of several key economic indicators.

The consumer price index is due to be released on Tuesday, housing starts on Wednesday, jobless claims, existing home sales, and the Philadelphia Fed Business Outlook Survey on Thursday.

There are also several Fed speeches scheduled for this week and investors are carefully monitoring the Fed, which they believe 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 7 percent for the November 2016 meeting, and 69 percent at the December meeting.

U.S. equities also showed weakness with the U.S. Dow Jones Industrial Average falling by 54 points, or 0.3 percent as of 1815 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.

Silver for December delivery rose 3.3 cents, or 0.19 percent, to close at 17.474 dollars per ounce. Platinum for 2017 January delivery fell 3.3 dollars, or 0.35 percent, to close at 936.2 dollars per ounce. Endit