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Gold up on weaker U.S. dollar

Xinhua, October 26, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Tuesday as the U.S. dollar weakened.

The most active gold contract for December delivery rose 9.9 U.S. dollars, or 0.78 percent, to settle at 1,273.60 dollars per ounce.

The precious metal was given support as the U.S. Dollar Index fell by 0.12 percent to 98.63 as of 1838 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.

Gold was given further support as the U.S.-based Conference Board released a report on Tuesday showing its consumer confidence level at a worse-than-expected 98.6 for the month of October, a figure which analysts note includes a revision downward for September to a 103.5 level.

Many investors believe that although the index measure has decreased, the jobs measure shows continuous strength, something which could influence the U.S. central bank' s potential rate hike increase later this year.

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 9 percent for the November 2016 meeting, and 79 percent at the December meeting.

A report released by the Richmond Federal Reserve showed a slight amount of strength, with its manufacturing index increasing from negative 8 to negative 4 during the month of October. However, analysts note that while new orders decreased, hiring activity and wages both strengthened significantly.

Traders are waiting for 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 17.6 cents, or 1.00 percent, to close at 17.78 dollars per ounce. Platinum for January delivery added 25.8 dollars, or 2.75 percent, to close at 964.90 dollars per ounce. Endit