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Gold falls ahead of FOMC minutes as U.S. dollar gains

Xinhua, February 23, 2017 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday ahead of the release of the Federal Reserve's most recent policy meeting minutes as the U.S. dollar trended higher.

The most active gold contract for March delivery fell 5.6 U.S. dollars, or 0.45 percent, to settle at 1,233.30 dollars per ounce. The U.S. Dollar index rose 0.2 percent to 101.53 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.

Expectations for the FOMC meeting notes are for hints on an increase in the U.S. interest rate sooner rather than later. 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 27 percent at the March meeting and 53 percent for the May meeting.

Gold was put under further pressure as a report released by the U.S.-based National Association of Realtors on Wednesday showed existing home sales increasing by 3.3 percent to a seasonally adjusted annual rate of 5.690 million units.

Both of these figures were better-than-expected and showed the best results since February 2007. Analysts note that this is a sign of strength in the housing market and will likely encourage investors, driving them away from the precious metal's safe haven properties.

Additionally, the U.S. Dow Jones Industrial Average rose by 32 points, or 0.15 percent as of 1815 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.

Traders are looking to the remainder of this week for the initial jobless claims report due on Thursday, and new home sales report on Friday.

Silver for March delivery fell 5.1 cents, or 0.28 percent, to close at 17.95 dollars per ounce. Platinum for April delivery dropped 3.3 dollars, or 0.33 percent, to close at 1,002.70 dollars per ounce. Endit