Gold up on weaker dollar, short covering

Gold futures on the COMEX division of the New York Mercantile Exchange rose Tuesday as the US dollar weakened, along with traders' short covering.

The most active gold contract for February delivery rose $01, or 0.01 percent, to settle at $1,075.30 per ounce.

Gold was given a slight amount of support from a falling US dollar, as the US Dollar Index fell by 0.31 percent to 98.45 as of 1715 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 holding other currencies.

The precious metal was given additional support as traders are continuing to exit short positions as the US Federal Reserve prepares to raise interest rates at the December FOMC meeting to be held next week.

According to the CMEGroup's Fedwatch tool, the current implied probability of a rate hike at the meeting is 83 percent.

Expectations were originally for a delay in the rate hike until 2016 but the FOMC meeting in late October confirmed that the Fed wants to raise rates before the end of 2015.

An increase in the Fed's interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

The precious metal was prevented from falling further as the Job Openings and Labor Turnover Survey report released by the US Department of Labour on Tuesday showed job openings falling to 5.383 million in October, and a revised figure of 5.534 million in September.

This report may provide a short-term boost to gold, but is highly unlikely to influence the Fed's decision-making at the December FOMC meeting.

Analysts believe that the market has now fully factored in the expected December rate hike, and that the market is now unsure of when the next rate hike will occur.

Silver for March delivery dropped 21.6 cents, or 1.51 percent, to close at 14.116 dollars per ounce. Platinum for January delivery fell $16.7, or 1.93 percent, to close at $846.50 per ounce.