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Gold down on stronger U.S. economic data

Xinhua, October 25, 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 U.S. dollars, or 0.32 percent, to settle at 1,263.70 dollars per ounce.

Gold was put under pressure as a report by Markit Economics showed its purchasing managers index (PMI) manufacturing index flash increasing to a 53.2 level, a measure which was much better than expected, indicating a sharp acceleration in growth during the month of October.

Analysts note inputs are at their strongest rate in two years. This drove investors away from the precious metal' s safe haven properties into more lucrative assets like the U.S. dollar.

The U.S. Dollar Index rose by 0.15 percent to 98.81 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.

A report released by the Chicago Federal Reserve showed its national activity index increasing from negative 0.72 to a negative 0.14 level, which analysts note was above expectations, and indicated strength in manufacturing and mining. Traders also noted an increase in employment, which may give further ammunition to the doves in the U.S. Federal Reserve.

Investors believe the Fed may raise rates from 0.50 to 0.75 during the December FOMC meeting. According to the CMEGroup' s Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 9 percent for the November 2016 meeting, and 74 percent at the December meeting.

Traders are waiting for the consumer confidence report and Richmond Fed Manufacturing Index due Tuesday, the international trade in goods report and new home sales report due on Wednesday, the durable goods orders and weekly jobless claims report due on Thursday, and the gross domestic product report due on Friday.

Silver for December delivery rose 11.1 cents, or 0.63 percent, to close at 17.604 dollars per ounce. Platinum for January delivery added 6.8 dollars, or 0.73 percent, to close at 939.10 dollars per ounce. Enditem