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Gold down on stronger U.S. data

Xinhua, November 24, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as strong U.S. economic data put pressure on the precious metal.

The most active gold contract for December delivery fell 21.9 U.S. dollars, or 1.81 percent, to settle at 1,189.30 dollars per ounce.

Investors were driven away from the precious metal as a safe haven as a report released on Wednesday by the U.S. Department of Commerce showed durable good orders increasing by 4.8 percent during the month of October, which was much higher than expected.

Analysts note a 12 percent gain in transportation orders and a 14.5 percent gain in core capital goods, both of which were also better than expected. This report put pressure on gold as analysts believe it increased investors' confidence in a December Federal Reserve rate hike.

Another report released on Wednesday by the U.S. Department of Commerce showed the PMI Manufacturing Index flash increasing to a level of 53.9, a figure which was within expectations. Analysts note that this indicates solid improvement and is the highest reading of this measure since October 2015.

Gold was not highly influenced by the U.S. Department of Labor's weekly jobless claims report, which was released on Wednesday instead of Thursday due to the U.S. Thanksgiving holiday. The report shows initial jobless claims increasing by 18,000 to 251,000, a figure within expectations.

However, analysts note that this week marks 90 weeks of initial claims below the 300,000 level, which they believe is the longest run below that level since 1970.

These three reports have kept investors focused on the expected Federal Open Market Committee (FOMC) meeting expected in December. 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 implied probability of a hike from 0.50 to at least 0.75 is at 94 percent at the December meeting and the same percentage for the February meeting.

Silver for December delivery fell 24.1 cents, or 1.45 percent, to close at 16.391 dollars per ounce. Platinum for January delivery dropped 11.9 dollars, or 1.26 percent, to close at 931.10 dollars per ounce. Endit