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Gold down on exceptionally strong U.S. Dollar

Xinhua, November 17, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as the U.S. dollar demonstrated unexpected strength.

The most active gold contract for December delivery fell 0.6 U.S. dollars, or 0.05 percent, to settle at 1,223.90 dollars per ounce.

Traders observed the U.S. dollar spending most of its day near a 13-year high, putting extensive pressure on the precious metal as the U.S. Dollar Index rose by 0.37 percent to 100.51 as of 1820 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. Dow Jones Industrial Average fell by 80 points, or 0.42 percent as of 1820 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.

Gold was given further support as a report released by the U.S. Department of Labor on Wednesday showed the producer price index (PPI) worse-than-expected, coming in unchanged during the month of October. Analysts note the expectation was for 0.2 percent growth which is the lowest end of the consensus range. The same analysts note that the energy section of the report prevented the reading of the PPD from reaching negative figures.

In addition to Wednesday's economic reports, the consumer price index, housing starts, weekly jobless claims, Philadelphia Federal Reserve Business Outlook Survey are due on Thursday, and finally several Federal Reserve officials are scheduled to speak on Friday.

Silver for December delivery dropped 11.6 cents, or 0.68 percent, to close at 16.927 dollars per ounce. Platinum for January delivery rose 11.8 dollars, or 1.26 percent, to close at 946.50 dollars per ounce. Endit