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Gold up on weaker U.S. dollar

Xinhua, November 2, 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 14.9 U.S. dollars, or 1.17 percent, to settle at 1,288.00 dollars per ounce.

The U.S. Dollar Index fell by 0.63 percent to 97.74 as of 1845 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 U.S.-based Institute for Supply Management (ISM) released on Tuesday showed the ISM manufacturing index at a 51.9 level during the month of October. Analysts note that although this was slightly above consensus, weakness in new orders gave support to the precious metal as they came in at a 52.1 level, down from September's 55.1 level.

The precious metal was prevented from rising further as ISM's purchasing managers index also released on Tuesday showed unexpected strength, with the index rising to a 53.4 level, a figure which showed additional domestic demand through export orders. Analysts note that although the ISM manufacturing index has decreased, this PMI manufacturing index shows backlogs rising to the best level since July.

The Federal Open Market Committee (FOMC) meeting has begun on Tuesday and traders are waiting for the FOMC announcement on Wednesday. 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 7 percent for the November 2016 meeting, and 74 percent at the December meeting.

Silver for December delivery rose 62.2 cents, or 3.50 percent, to close at 18.418 dollars per ounce. Platinum for January delivery added 19.3 dollars, or 1.97 percent, to close at 997.90 dollars per ounce. Endit