Gold futures on the COMEX division of the New York Mercantile Exchange rose on Tuesday as traders covered their shorts amid low holiday activity.
The most active gold contract for February delivery rose 5.2 U.S. dollars, or 0.46 percent, to settle at 1,138.80 dollars per ounce.
Investors are focused on squaring their positions ahead of the beginning of the new year and the precious metal was given support as traders eliminated their short positions, buying the precious metal to close the open position, giving support to the precious metal.
While normally positive economic developments put pressure on gold but as investors were in the process of covering longer-term shorts on Tuesday, gold was given support as a report released by the U.S.-based Conference Board showed consumer confidence reaching a much better-than-expected level of 113.7.
Analysts note strength indicated in both the income and jobs confidence measures. Investors are expecting low trading activity in the week ahead as historically traders take the week off between the U.S. Christmas holiday and New Year, but the pending home sales index is due on Wednesday, international trade in goods and weekly jobless claims on Thursday.
The U.S. Dollar Index, a measure of the dollar against a basket of major currencies, rose by 0.05 percent to 103.03 as of 1920 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.
Focus has not yet begun on the next Fed rate hike, as the U.S. central bank's rate hike just passed during the December Federal Open Market Committee (FOMC) meeting, but investors believe the Fed may raise rates from 0.75 to 1.00 during the March FOMC meeting at the earliest.
According to the CME Group's Fedwatch tool, the current implied probability of a hike from 0.50 to at least 0.75 is at 4 percent at the February meeting and 25 percent for the March meeting.
Silver for March delivery rose 23 cents, or 1.46 percent, to close at 15.989 dollars per ounce. Platinum for January delivery added 10.9 dollars, or 1.22 percent, to close at 904.10 dollars per ounce.
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