Forexpros – Gold futures traded sharply lower during U.S. hours Wednesday, as strong U.S. housing numbers dampened monetary easing speculation.
Market participants now looked ahead to a second day of testimony from Federal Reserve Chairman Ben Bernanke.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,573.65 a troy ounce during U.S. afternoon trade, giving back 1.03%.
It earlier fell by as much as 1.4% to trade at USD1,567.35 a troy ounce, the lowest since July 13.
Gold futures were likely to find near-term support at USD1,554.55 a troy ounce, the low from July 12 and resistance at USD1,601.25, the high from July 10.
Gold futures fell to their lowest levels of the session after official data showed that the number of U.S. housing starts rose more-than-expected in June, hitting the highest level since April 2010.
The Commerce Department said U.S. housing starts rose by 6.9% in June to a seasonally adjusted 0.760 million, compared to expectations for a gain of 5.2%.
Housing starts for May were revised up to 0.711 million units, up from a previously reported 0.708 million units.
The report said the number of building permits issued fell 3.7% in June to a 755,000 unit pace.
Meanwhile, market participants continued to mull over mixed messages from the U.S. central bank after Chairman Ben Bernanke offered a downbeat view of the U.S. economic outlook in testimony to the Senate on Tuesday, but failed to explicitly indicate if additional stimulus measures are imminent.
Gold traders now looked ahead to Bernanke’s return to Capitol Hill later Wednesday to testify to the House Financial Services Committee.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.
Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 12% since late February, as the Fed failed to deliver more easing and amid concerns over the euro zone’s deepening debt crisis, which has fueled demand for the precious metal’s hedge, the greenback.
The euro sank against the U.S. dollar after German Chancellor Angela Merkel said in an interview that she was not certain the European project would be successful, but reiterated that she was optimistic in spite of the current difficulties.
Earlier in the day, Germany auctioned more than EUR4 billion of two-year government bonds at negative yields for the first time at this type of auction, reflecting sustained investor concerns over the debt crisis in the region.
Elsewhere on the Comex, silver for September delivery tumbled 0.70% to trade at USD27.12 a troy ounce, while copper for September delivery gained 0.43% to trade at USD3.470 a pound.
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