Gold down on stronger US dollar

Chicago, Nov 21 (IANS) Gold futures on the COMEX division of the New York Mercantile Exchange fell as the US dollar strengthened, putting pressure on the precious metal.

The most active gold contract for December delivery on Friday fell $1.6 (0.15 percent) to settle at $1,076.30 per ounce, Xinhua reported.

The US Dollar Index, a measure of the dollar against a basket of major currencies, rose on Friday. Gold and the dollar typically move in opposite directions.

Gold was put under further pressure as a report released by the US Federal Reserve showed the Kansas city district’s manufacturing index up by two points to positive one, which analysts note is the first positive reading since February.

The new orders reading has risen to positive five, and the production reading is at positive three.

The precious metal reached a near six-year-low on Friday, but rebounded on technical trading. It still closed lower than the previous day.

Analysts believe that the only reason that gold has not fallen further than it already has on Friday is because of technical trading.

The potential for a rate hike at the December Federal Open Market Committee (FOMC) meeting has kept prices within a tight and low channel.

Expectations were originally for a delay in the rate hike till 2016 but the FOMC meeting in late October left the door open for the Fed to raise rates before the end of 2015.

An increase in the Fed’s interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest.

Silver for December delivery fell 12.6 cents (0.89 percent) to close at $14.096 per ounce.

Platinum for January delivery dropped $2.2 (0.26 percent) to close at $855.90 per ounce.

 

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