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Gold down on U.S. dollar rebound

Xinhua, December 7, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Tuesday as the U.S. dollar rebounded after a sharp drop on Monday.

The most active gold contract for February delivery fell 6.4 U.S. dollars, or 0.54 percent, to settle at 1,170.10 dollars per ounce.

Strength in the U.S. dollar put pressure on gold as the U.S. Dollar Index, a measure of the dollar against a basket of major currencies, rose by 0.35 percent to 100.51 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.

Traders are carefully monitoring the situation in Italy continues to develop. Investors fear the possible exit of Italy from the European Union, which is destabilizing to the E.U. and as a result is supportive to gold, but the latest information has indicated that despite the prime minister's resignation, there are no other signs that the country will exit the European Union.

Gold was given support as a report released by the U.S. Department of Commerce on Tuesday showed the international trade deficit increasing to negative 42.6 billion, a figure which analysts note incorporated an 1.8 percent decline in exports. This report was supportive to gold, as weakening U.S. exports are not a good sign for U.S. economic strength.

The implied probability of a Fed rate hike during the next FOMC meeting has stayed relatively the same compared to last week. 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 94 percent at the December meeting and 94 percent for the February meeting.

Silver for March delivery dropped 8.9 cents, or 0.53 percent, to close at 16.81 dollars per ounce. Platinum for January delivery fell 2.9 dollars, or 0.31 percent, to close at 935.70 dollars per ounce. Endit