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Gold down on stronger U.S. data, dollar

Xinhua, January 26, 2017 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as the U.S. equities showed strength.

The most active gold contract for February delivery fell 13 U.S. dollars, or 1.07 percent, to settle at 1,197.80 dollars per ounce.

Strength in the U.S. Dow Jones Industrial Average (DJIA) put extensive pressure on gold as the DJIA passed a key psychological resistance level of 20,000, which is the first time in history that measure has passed 20,000.

Analysts note that this strength in equities is potentially in reaction to tax cuts and pro-business policy anticipated from U.S. President Donald Trump. 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.

Gold was prevented from falling further as the U.S. Dollar Index fell by 0.21 percent to 100.06 as of 1845 GMT. 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.

Traders are also waiting for the international trade in goods report and weekly jobless claims report due Thursday, and the durable goods orders and gross domestic product report on Friday.

Investors will be carefully monitoring the February Federal Open Market Committee (FOMC) meeting scheduled for next week for hints on when to expect the next rate hike. Investors believe the Fed may raise rates from 0.75 to 1.00 during the March FOMC meeting at the earliest.

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 4 percent at the February meeting and 25 percent for the March meeting.

Silver for March delivery fell 20.5 cents, or 1.19 percent, to close at 16.98 dollars per ounce. Platinum for April delivery dropped 26.1 dollars, or 2.59 percent, to close at 981.70 dollars per ounce. Enditem