Gold takes a dive on upbeat U.S. consumer confidence report

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Investing.com - Gold prices dropped in U.S. trading on Tuesday after an upbeat consumer confidence report sent investors betting that the Federal Reserve will deliver an positive take on the U.S. economy at a policy meeting this week and make fresh cuts to its stimulus program that has supported the yellow metal for years.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,300.80 a troy ounce during U.S. trading, down 0.38%, up from a session low of $1,298.10 and off a high of $1,314.40.

The December contract settled up 0.04% at $1,305.80 on Monday.


Futures were likely to find support at $1,289.40 a troy ounce, Thursday's low, and resistance at $1,320.40, the high from July 21.

Data released earlier bolstered the dollar and in turn, pushed down gold, as the two assets tend to trade inversely with one another.

The Conference Board reported that its consumer confidence index rose to 90.9 in July from an upwardly revised 86.4 in June. It was the highest reading since October 2007, defying consensus forecasts for a decline to 85.3.

The data sent investors betting that the Federal Reserve will conclude a policy meeting on Wednesday announcing fresh cuts to its monthly bond-buying program and deliver an upbeat take on the U.S. economy.

Fed asset purchases which have stimulated the economy off and on since the 2008 crisis, which, coupled with low interest rates, have weakened the dollar by sending investors to stocks, with gold serving as an attractive under such loose monetary policies.

While markets expect the Fed to wrap up its bond-buying program this year-likely some time in or around October-uncertainty still persists as to how much time will pass after stimulus programs conclude and rate hikes begin, with data driving investor guesses on Fed timetables.

Elsewhere in the U.S., investors took in stride the S&P/Case Shiller Home Price Index.

The 20-city composite index for May grew 9.3% year-over-year, down from April's 10.8% reading, while the 10-city index grew 9.4%, down from April's 10.9%, though markets have priced in slackness in the U.S. housing sector.

Meanwhile, silver for September delivery was up 0.13% at $20.593 a troy ounce, while copper futures for September delivery were down 0.76% at $3.219 a pound.

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This article appears in: Investing , Forex and Currencies

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