Gold up on short covering

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Friday as the US dollar showed weakness, along with short covering by traders.

The most active gold contract for February delivery rose $22.9 (2.16 per cent) to settle at $1,084.10 per ounce, Xinhua reported.

For the week, gold futures added 2.64 per cent, its first weekly gain since October 16.

Gold was given support on Friday as the US Dollar Index fell by 0.43 per cent to 98.34, as the market continued to react to the decisions of the European Central Bank Meeting (ECB), which showed a smaller-than-expected expansion of the ECB’s bond-buying stimulus plan, according to analysts.

Gold was given further support as traders stayed with short positions as the expectations rose for a rate hike at the US Fed’s Federal Open Market Committee (FOMC) meeting scheduled for December 15-16, following a report released by the US Department of Labour on Friday.

It showed nonfarm payrolls increasing to 211,000 in November. Analysts also noted that the previous two months were revised upward by 35,000, giving further credibility to the prospect of a December rate hike.

Analysts believe that the market has now fully factored in the expected December rate hike. The CME Group’s implied probability for that month’s FOMC meeting is now at 78 per cent.

Silver for March delivery added 45.1 cents (3.20 per cent) to close at $14.528 per ounce.

Platinum for January delivery rose $33.1 (3.91 per cent) to close at $880.60 per ounce.

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