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Gold futures fall on stronger U.S. dollar

Xinhua, January 27, 2017 Adjust font size:

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

The most active gold contract for February delivery fell 8 U.S. dollars, or 0.67 percent, to settle at 1,189.80 dollars per ounce.

The U.S. Dollar Index rose by 0.48 percent to 100.40 as of 18:00 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.

The precious metal was put under further pressure as the U.S. Dow Jones Industrial Average rose by 25.90 points, or 0.13 percent as of 18:00 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.

Gold was put under pressure as a report released on Thursday by the U.S. Department of Commerce showed the international trade in goods report's U.S. trade deficit measure decreasing to negative 65.0 billion U.S. dollars during the month of December.

The previous reading was at negative 65.3 billion U.S. dollars. Additionally, U.S. exports increased to positive 3.0 percent from a prior revised negative 0.8 percent. Analysts note strength in aircraft and industrial supplies.

The U.S. Department of Labor released its weekly jobless claims report on Thursday giving support to gold as initial jobless claims rose by 22,000 to a 259,000 level during the week of January 21, a figure which analysts note was only slightly supportive to gold as this week contained the Martin Luther King holiday and volatility is common during those weeks.

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 13 cents, or 0.77 percent, to close at 16.85 dollars per ounce. Platinum for April delivery remained unchanged, to close at 981.70 dollars per ounce. Endit