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Gold futures inch higher amid uncertainty over Fed, U.S. election

Published 10/27/2016, 03:21 AM
Updated 10/27/2016, 03:21 AM
© Reuters.  Gold pushes higher amid uncertainty over Fed, U.S. election

© Reuters. Gold pushes higher amid uncertainty over Fed, U.S. election

Investing.com - Gold prices inched higher during Europe's session on Thursday, as ongoing uncertainty surrounding Federal Reserve monetary policy and the U.S. election supported demand for safe-haven assets.

Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $2.35, or 0.19%, to $1,268.95 a troy ounce by 3:15AM ET (07:15GMT).

A day earlier, the yellow metal lost $7.00, or 0.55%, after touching a three-week high of $1,277.20.

The near-term outlook for gold remains cloudy as a recent string of positive U.S. economic data combined with hawkish remarks from key Fed officials heightened expectations for an interest rate hike before the end of the year.

The U.S. central bank's next meeting is in November, but a rate hike ahead of the presidential election is seen as unlikely.

Instead, traders are currently pricing in around a 78% chance of a rate hike at the Fed's December meeting, according to Investing.com's Fed Rate Monitor Tool.

The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 98.70 early Thursday, within sight of a nine-month high of 99.09 touched earlier this week.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Later on Thursday, market participants will parse the latest data on U.S. durable goods, jobless claims and pending home sales. U.S. third-quarter growth figures scheduled for release on Friday could provide further hints on the future path of monetary policy.

Also on the Comex, silver futures for December delivery shed 1.8 cents, or 0.1%, to $17.60 a troy ounce during morning hours in London, while copper futures dipped 1.5 cents, or 0.68%, to $2.131 a pound.

Data released earlier showed that profit growth in China's industrial firms slowed sharply in September as some key manufacturing sectors stumbled on weak activity and rising debt, suggesting the world's second-biggest economy remains underpowered.

Industrial sector profits last month rose 7.7%, slowing markedly after surging 19.5% in August, the National Bureau of Statistics said.

China is the world’s largest copper consumer, accounting for nearly 45% of world consumption.

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