Gold price down on stronger US equities
Chicago (Oct 1) Gold futures on the COMEX division of the New York Mercantile Exchange fell on Friday as U.S. equities strengthened.
The most active gold contract for December delivery fell 8.9 U.S. dollars, or 0.67 percent, to settle at 1,317.1 dollars per ounce.
Gold was put under pressure as the U.S. Dow Jones Industrial Average rose by 204 points, or 1.13 percent as of 1900 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.
Analysts note that the market had volatility due to a Deutsche Bank settlement on Thursday, but that had largely dissipated on Friday and trading returned to normal, driving investors away from the precious metal' s safe haven properties.
The precious metal was prevented from falling further as the U.S. Dollar Index fell by 0.08 percent to 95.45 as of 19:00 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.
A report released by the U.S. Department of Commerce on Friday showed personal income and outlays showing inflation increasing, but exactly at the median of consensus. The report shows personal income increasing by 0.2 percent, consumer spending unchanged, and the PCE Price Index increasing by 0.1 percent. Analysts note that the absence of strong inflation gives the hawks at the U.S. Federal Reserve further ammunition going into the November Federal Open Market Committee (FOMC) meeting.
Analysts note the Fed may raise rates from 0.50 to 0.75 during the December FOMC meeting. According to the CME Group' s Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 10 percent for the November 2016 meeting, and 62 percent at the December meeting.
Silver for December delivery rose 2.6 cents, or 0.14 percent, to close at 19.214 dollars per ounce. Platinum for January delivery fell 2.7 dollars, or 0.26 percent, to close at 1,034.5 dollars per ounce.