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Gold up ahead of FOMC announcement

Xinhua, December 15, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Wednesday as traders hedged bets ahead of the Federal Open Market Committee (FOMC) meeting announcement scheduled for after the market's close.

The most active gold contract for February delivery rose 4.7 U.S. dollars, or 0.41 percent, to settle at 1,163.70 dollars per ounce.

The precious metal was given support as investors spent the day preparing their trading positions for the long-expected Fed rate hike. Despite expectations being primarily for an increase in the interest rate, the precious metal rose slightly as traders covered shorts and eliminated long positions to avoid the risk associated with taking positions during the FOMC meeting.

The retail sales report released by the U.S. Department of Commerce on Wednesday showed retail sales increasing by 0.1 percent in November, a figure which gave some support to the precious metal as it was on the low end of expectations. Analysts note weakness in U.S. auto sales, which has previously been a high point for this report.

Gold was put under pressure as the U.S. Dollar Index rose by 1.04 percent to 102.11 as of 1930 GMT. The dollar spent most of the day in positive territory. 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 put under pressure as a report released by the U.S. Department of Labor on Wednesday showed the producer price index increasing by 0.4 percent during the month of November, a figure which was higher-than-expectations and put pressure on the precious metal as it raised expectations for future FOMC meetings, as it showed higher level of inflation, which is something the U.S. central bank seeks to control.

Silver for March delivery rose 24.4 cents, or 1.44 percent, to close at 17.221 dollars per ounce. Platinum for January delivery added 4.1 dollars, or 0.44 percent, to close at 940.80 dollars per ounce. Endit