Gold dips as firming U.S. indicators bolster demand for dollar

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Investing.com - Gold prices fell on Tuesday after better-than-expected U.S. housing, confidence and factory reports sent investors chasing the dollar amid sentiments that the Federal Reserve is closer to scaling back stimulus programs that weaken the dollar to spur recovery.

Gold and the dollar tend to trade inversely from one another.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down 0.07% at USD1,276.15 a troy ounce in U.S. trading on Tuesday, up from a session low of USD1,270.95 and down from a high of USD1,288.65 a troy ounce.

Gold futures were likely to find support at USD1,268.75 a troy ounce, Friday's low, and resistance at USD1,300.55, Monday's high.

Federal Reserve Chairman Ben Bernanke said last week that monetary stimulus measures may taper this year and possibly end next year if the economy improves.

Stimulus programs such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery, which makes gold an attractive hedge, though talk of their dismantling sends the dollar rising and gold falling.

Data released earlier revealed that U.S. consumer confidence rose to its highest level since January 2008 this month.

The Conference Board said its index of U.S. consumer confidence rose to 81.4 in June from 74.3 in May, well above expectations for a reading of 75.4.

In a separate report, the Commerce Department said U.S. orders for durable goods rose 3.6% in May, outstripping expectations for a 3.0% gain.

Positive data from the housing market sent the dollar gaining as well.

The Commerce Department said U.S. new home sales rose by 2.1% to 476,000 units in May, the highest level since July 2008 and well above expectations for an increase of 1.3% to 462,000.

Home prices are on the rise as well.

The Standard & Poor's/Case-Shiller 20-city house price index rose 12.1% in April from a year earlier, above expectations for a 10.6% increase.

U.S. home prices in March rose by 10.9%.

Elsewhere on the Comex, silver for September delivery was up 0.39% at USD19.600 a troy ounce, while copper for September delivery was up 1.78% and trading at USD3.082 a pound.









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This article appears in: Investing , Forex and Currencies

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