Investing.com - Gold prices dropped on Monday after investors
shrugged off soft U.S. housing figures and sold on concerns years
of support from the Federal Reserve via monetary stimulus tools
will be winding down in 2014.
On the Comex division of the New York Mercantile Exchange, gold
futures for February delivery traded at USD1,201.80 a troy ounce
during U.S. trading, down 1.00%. Gold prices traded in a range
between USD1,200.30 a troy ounce and USD1,215.80 a troy ounce.
Futures were likely to find near-term support at USD1,195.70 a troy
ounce, the low from Dec. 24 and resistance at USD1,218.30, the high
from Dec. 27. The February contract settled 0.14% higher on Friday
to end at USD1,214.00 a troy ounce.
The National Association of Realtors reported earlier that its
pending home sales index increased by a seasonally adjusted 0.2% in
November, far shy of market expectations for a 1.0% gain. Pending
home sales for October were revised to a 1.2% decline from a
previously reported drop of 0.6%.
The disappointing data sent the greenback falling, wiping out gains
locked in when the Federal Reserve announced it would trim USD10
billion from its USD85 billion in monthly bond-buying purchases
beginning in January.
The Fed has said it may taper the program even more should data
show that economic recovery is gaining steam while adding soft
patches could prompt the U.S. central bank to hike up monthly bond
purchases to ensure price and labor-market stability.
Still, gold futures suffered on sentiments that Fed bond purchases,
which support gold by bolstering its image as a hedge to a weaker
dollar, will scale back sooner rather than later, ending a
multi-year rally fueled by monetary support.
Trading volumes were thin as many investors already closed books
before the end of the year, reducing liquidity in the market and
increasing volatility, which helped exaggerate market moves.
Elsewhere on the Comex, silver futures for March delivery dipped
2.16% to trade at USD19.615 a pound, while copper for March
delivery was down 0.06% at 3.383.
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