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Gold up ahead of FOMC meeting

Xinhua, December 8, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Wednesday as traders readjusted their positions ahead of the U.S. central bank's Federal Open Market Committee (FOMC) meeting.

The most active gold contract for February delivery rose 7.4 U.S. dollars, or 0.63 percent, to settle at 1,177.50 dollars per ounce.

The market has focused on the upcoming December FOMC meeting and traders are looking to the weekly jobless claims report on Thursday, and the consumer sentiment report on Friday for further hints on the U.S. central bank' s thinking on the timing of an interest rate hike.

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 95 percent at the December meeting and 95 percent for the February meeting.

Gold was given support as the job openings and labor turnover survey report released on Wednesday by the U.S. Department of Labor showed job openings decreasing by 1.7 percent to 5.534 million during the month of October. Analysts note that these figures included slower hiring, but increased openings. The same analysts believe that this data indicates employers are unable to find sufficiently qualified candidates.

The precious metal was given further support as the U.S. Dollar Index, a measure of the dollar against a basket of major currencies, fell by 0.23 percent to 100.24 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.

Strength in U.S. equities prevented the precious metal from rising further as the U.S. Dow Jones Industrial Average rose by 260 points, or 1.35 percent as of 1800 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.

Silver for March delivery added 46.5 cents, or 2.77 percent, to close at 17.275 dollars per ounce. Platinum for January delivery rose 7.5 dollars, or 0.80 percent, to close at 943.20 dollars per ounce. Endit