|
CHICAGO, Sept. 21 (Xinhua) -- Gold futures on the COMEX division of the New York Mercantile Exchange rose on Wednesday as investors prepared for the Federal Reserve's policy announcement.
The most active gold contract for December delivery rose 13.2 U.S. dollars, or 1.00 percent, to settle at 1,331.4 dollars per ounce.
Traders prepared for the results of the September Federal Open Market Committee meeting during the trading day on Wednesday, giving extensive support to the precious metal.
Analysts note that despite the recent implied probabilities of a Fed rate hike decreasing for the September and November FOMC meetings, the prediction that the Fed will raise rates at the December meeting has remained steady, putting pressure on the precious metal as investors are moved to more risky interest-bearing assets.
Analysts believe Fed intends to soak up some of the banks' 2.5 trillion U.S. dollars of excess reserves as the U.S. economy begins to recover.
Banks become more willing to take risks in a bullish economy, and as a result could potentially release some of their excessive reserves, flooding the economy with cash, causing inflation.
Ahead of the September meeting, expectations were that 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 12 percent at the November 2016 meeting, and 58 percent at the December meeting.
The U.S. Dollar Index, a measure of the dollar against a basket of major currencies, fell by 0.24 percent to 95.77 as of 1745 GMT.
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.
Traders are waiting for the release of the existing home sales report and weekly jobless claims on Thursday in addition to the PMI manufacturing index flash on Friday. But all focus is likely to be on the results of the FOMC meeting during the trading day on Thursday.
Silver for December delivery rose 49.1 cents, or 2.55 percent, to close at 19.768 dollars per ounce. Platinum for October delivery added 17 dollars, or 1.65 percent, to close at 1,047.9 dollars per ounce. Enditem
