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Gold drops on bullish U.S. consumer confidence report

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Shutterstock photo - - Gold prices dropped on Tuesday after robust consumer confidence data fueled already growing market expectations for the Federal Reserve to conclude a monetary policy meeting on Wednesday by announcing fresh cuts to its USD75 billion monthly stimulus program.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,250.40 a troy ounce during U.S. trading, down 1.04%, up from a session low of USD1,248.90 and off a high of 1,261.20.

The April contract settled down 0.08% at USD1,263.50 on Monday.

Futures were likely to find support at USD1,231.30 a troy ounce, the low from Jan. 23, and resistance at USD1,279.20, the high from Jan. 26.

The Conference Board said its index of consumer confidence improved to 80.7 this month from a downwardly revised 77.5 in December.

Analysts were expecting the index to rise to 78.1, and the numbers fueled expectations that the Fed will conclude a two-day policy meeting on Wednesday announcing fresh cuts to its USD75 billion bond-buying program.

Fed asset purchases tend to weaken the dollar by driving down long-term interest rates, while talk of their dismantling often strengthens the greenback, which historically moves inversely with gold.

Meanwhile a separate report showed that U.S. durable goods orders fell unexpectedly in December.

The Commerce Department reported earlier that durable goods orders fell 4.3% in December, confounding expectations for a 1.8% gain.

Core durable goods, which are stripped of volatile transportation items, orders fell 1.6% in December, the largest drop since March, compared to forecasts for a 0.5% increase.

Orders for core capital goods, a key barometer of private-sector business investment, fell 1.3% last month, confounding expectations for a 0.5% gain and after rising 2.6% in November.

Still, investors bet that months of broad improvements to U.S. economic indicators will prompt the Fed to trim around USD10 billion from its USD75 billion bond-buying program.

Also fueling gold's losses were recovery in global stock markets.

Gold often serves as a hedge when stocks plummet in global selloffs.

Meanwhile, silver for March delivery was down 1.47% and trading at USD19.502 a troy ounce, while copper futures for March delivery were down 0.21% and trading at USD3.252 a pound. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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