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Gold futures rise on weaker U.S. equities

Xinhua, January 31, 2017 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Monday as U.S. equities weakened.

The most active gold contract for April delivery rose 4.9 U.S. dollars, or 0.41 percent, to settle at 1,196 dollars per ounce.

Traders spent the day focused on the fall in U.S. equities as the U.S. Dow Jones Industrial Average fell by 158 points, or 0.79 percent as of 1845 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.

However volume on Monday was at regular levels, leading some analysts to question the impact of the fall of equities on the precious metal.

Investors are currently preparing for the Federal Open Market Committee (FOMC) meeting due to begin on Tuesday and end with a press conference and announcement on Wednesday after the market's close.

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 21 percent for the March meeting.

The personal income and outlays report released by the U.S. Department of Commerce on Monday showed personal income increasing by 0.3 percent, a figure which was below consensus. Consumer spending increased by 0.5 percent, in line with consensus.

However, analysts note that the savings rate fell by 0.2 to 5.4 percent, but that inflation remains low, despite trending higher.

Strength in the U.S. dollar prevented the precious metal from rising further as the U.S. Dollar Index rose by 0.1 percent to 100.45 as of 1850 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.

Silver for March delivery rose 1.6 cents, or 0.09 percent, to close at 17.152 dollars per ounce. Platinum for April delivery added 10.2 dollars, or 1.04 percent, to close at 993.50 dollars per ounce. Endit