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Gold up on weaker U.S. dollar

Xinhua, November 3, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Wednesday ahead of the Federal Open Market Committee announcement.

The most active gold contract for December delivery rose 20.2 U.S. dollars, or 1.57 percent, to settle at 1,308.20 dollars per ounce.

The precious metal was given support as investors spent the trading sessions eagerly awaiting the results from the Federal Open Market Committee (FOMC) meeting.

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 at least 0.75 is at 72 percent at the December meeting and 73 percent for the February meeting.

Traders believe that the precious metal also gained strength because of the uncertainty in the U.S. presidential race, as they are unsure of what trade policies U.S. Republican candidate Donald Trump would put in place. In prior months the chances of a Trump victory were unlikely, and there was no safe haven demand for the precious metal, but recent polls have shown the race tightening, driving investors to the precious metal as a safe haven.

Gold was given additional support as a report released by the U.S.-based Automated Data Processing showed its employment report released on Wednesday decreasing sharply, far below expectations, at a 147,000 level. Analysts note that this report is coming out just days before the Friday big jobs report and may be a preview of both that report and the Fed's thinking with regards to rate hikes over the next several months.

The U.S. Dollar Index rose by 0.41 percent to 97.34 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.

Silver for December delivery rose 27.5 cents, or 1.49 percent, to close at 18.693 dollars per ounce. Platinum for January delivery added 3.9 dollars, or 0.39 percent, to close at 1,001.80 dollars per ounce. Endit