Gold price down on stronger U.S. dollar ahead of ECB meeting

Chicago (Oct. 21)  Gold futures went down on the COMEX division of the New York Mercantile Exchange Wednesday as the U.S. dollar strengthened ahead of the European Central Bank meeting.

The most active gold contract for December delivery fell 10.4 U.S. dollars, or 0.88 percent, to settle at 1,167.10 dollars per ounce.

Gold was put under pressure as the U.S. Dollar Index rose ahead of a meeting of the European Central Bank (ECB) Thursday, where analysts believe ECB President Mario Draghi will provide an indication as to a possible expansion of quantitative easing. Originally traders had expected that this would boost the euro, but now reports indicate that the desire is to keep the euro lower, so as to protect exporters and keep inflation down.

However, analysts said that gold was kept in a narrow range as uncertainty over the timing of U.S. Federal Reserve's interest rate hike influenced traders. And the trading remained to be quiet ahead of Fed's policy meeting next week.

According to the CME's FedWatch tool, the current implied probability for an increase in the U.S. Federal Reserve's rates lies at 35 percent before the end of 2015, with a 5 percent chance during the October Federal Open Market Committee meeting, and a 30 percent chance during the December FOMC meeting. 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. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

Silver for December delivery fell 20.7 cents, or 1.30 percent, to close at 15.71 dollars per ounce. Platinum for January delivery dropped 13 dollars, or 1.27 percent, to close at 1,007.10 dollars per ounce.

Source: Xinhua