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Gold up on weaker U.S. dollar

Xinhua, October 29, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Friday as the U.S. dollar weakened, despite stronger gross domestic product data.

The most active gold contract for December delivery rose 7.3 U.S. dollars, or 0.58 percent, to settle at 1,276.8 dollars per ounce.

Gold was given support as the U.S. Dollar Index fell by 0.5 percent to 98.44 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 precious metal was prevented from rising further as the U.S. Department of Commerce released a stronger-than-expected U.S. gross domestic product (GDP) report on Friday. The GDP rose by 2.9 percent during the third quarter of 2016, which was higher than consensus. Analysts note that personal consumption and durables also increased, with durables gaining 9.5 percent.

Investors were encouraged by the stronger-than-expected GDP data, and believe that considering the recent strong U.S. data, the Fed may raise rates from 0.50 to 0.75 during the December Federal Open Market Committee (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 74 percent at the December meeting.

Traders are waiting for the November FOMC meeting next week to make any major market plays in gold. The FOMC announcement is expected after the market' s close on Wednesday. Also expected next week is the personal income and outlays report on Monday, the Institute for Supply Management' s manufacturing index, the ADP employment report on Wednesday, weekly jobless claims on Thursday, and the big jobs report and international trade report on Friday.

Gold was also put under a slight amount of additional support as the U.S. Dow Jones Industrial Average fell by 3 points, or 0.02 percent as of 1830 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 15.7 cents, or 0.89 percent, to close at 17.796 dollars per ounce. Platinum for January delivery added 16.5 dollars, or 1.71 percent, to close at 981.4 dollars per ounce. Enditem