Gold futures off lows as dollar eases

 FRANKFURT-GERMANY (July 25)  Gold futures edged higher on Thursday, but gains were limited as Wednesday’s stronger-than-forecast U.S. housing data boosted expectations that the Federal Reserve will start to scale back its bond buying program later this year.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,320.75 a troy ounce during European morning hours, easing up 0.11%.

The August contract settled down 1.1%, at USD1,319.50 a troy ounce on Wednesday.

Gold futures were likely to find support at USD1,295.86 a troy ounce, the low from July 22 and resistance at USD1,347.69, Wednesday’s high.

Gold prices fell sharply on Wednesday as the dollar gained ground against the other major currencies after official data showed that U.S. new home sales jumped to a five-year high in June.

The data was seen as increasing the likelihood that the Federal Reserve will start to taper its asset purchase program later this year.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies.

Trade looked likely to remain subdued ahead of data on U.S. jobless claims and durable goods orders later in the trading day.

Elsewhere on the Comex, silver for September delivery eased up 0.12% to trade at USD20.045 a troy ounce, while copper for September delivery dipped 0.07% to trade at USD3.177 a pound.