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Gold futures rise on weaker dollar, political uncertainty

Xinhua, February 17, 2017 Adjust font size:

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

The most active gold contract for March delivery rose 8.5 U.S. dollars, or 0.69 percent, to settle at 1,241.60 dollars per ounce.

Gold was given extensive support as the U.S. Dollar Index fell by 0.59 percent to 100.49 as of 1815 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 U.S. Dow Jones Industrial Average fell by 29 points, or 0.14 percent as of 18:20 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.

Since Wednesday, the odds for a rate hike have increased significantly. Investors believe the Fed may raise rates from 0.75 to 1.00 during the May 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 18 percent at the March meeting and 44 percent for the May meeting.

Gold's gains were capped as a report released by the U.S. Department of Commerce on Thursday showed housing starts reaching 1.246 million starts, which was better than expected, and permits at a one-year-high, at 1.285 million permits, which was also better than expected. Analysts note that year-on-year improvement is significant as well.

The precious metal was put under further pressure as report released by the U.S. Department of Labor on Thursday showed initial jobless claims increasing by a much better-than-expected 5,000 to a 239,000 level during the week of February 11th. Analysts note that both of these figures are exceptionally strong.

Gold was put under extensive pressure as the Philadelphia Fed Business Outlook Survey jumped to 43.3 as of 18:15 GMT, showing the strongest reading of the measure since January 1984. Analysts note that new orders increased by 12 points to 38.

Silver for March delivery rose 11.1 cents, or 0.62 percent, to close at 18.074 dollars per ounce. Platinum for April delivery added 5.8 dollars, or 0.57 percent, to close at 1,015.70 dollars per ounce. Endit