Gold falls as U.S. dollar surges

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as the U.S. dollar surged on stronger U.S. data.

The most active gold contract for February delivery fell 16.9 U.S. dollars, or 1.42 percent, to settle at 1,173.90 dollars per ounce.

The U.S. dollar strengthened significantly as two strong economic reports gave the currency support. The U.S. Dollar Index, a measure of the dollar against a basket of major currencies, rose by 0.53 to 101.52 as of 1800 GMT.

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.

Gold was put under pressure as a report released by the U.S.-based Automated Data Processing on Wednesday showed strong employment at a better-than-expected level of 216,000 during the month of November compared to a measure of 147,000 during the previous month.

Analysts note that report is coming out ahead of the Friday big jobs report for November and put pressure on the precious metal, driving investors away from gold to more lucrative interest-bearing assets.

A report released by the U.S. Department of Commerce on Wednesday showed its personal income and outlays measure increasing by 0.6 percent during October, with consumer spending increasing by 0.3 percent.

While the consumer spending was in-line with expectation, personal income gains showed unexpected strength, above the highest consensus range estimate. This also put pressure on gold as it drove investors away from the precious metal's safe haven properties.

Silver for March delivery dropped 25.8 cents, or 1.54 percent, to close at 16.482 dollars per ounce. Platinum for January delivery fell 11.4 dollars, or 1.24 percent, to close at 909.90 dollars per ounce. Endit