Gold Ends Lower On Strong Dollar, Ahead Of Fed Minutes

(RTTNews) - Gold futures ended lower on Tuesday, as the dollar strengthened against a basket of major currencies and with investors opting for the riskier equity assets, after the U.S. Federal Reserve began its highly anticipated two-day policy meet.

Gold traded in a tight trading range ahead of the Federal Reserve announcement on Wednesday, with most economists expecting the Fed to signal that the first rate hike is not far off, most likely in September.

The dollar also made gains after some mixed economic data from the U.S. with building permits, an indicator of future housing demand, surging 11.8 percent in May. Nevertheless, housing starts in the U.S. pulled back more than expected in May, after reporting a sharp jump in new residential construction in the previous month

Gold for August delivery, the most actively traded contract, dropped $4.90 or 0.4 percent to settle at $1,180.90 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for August delivery scaled an intraday high of $1,187.40 and a low of $1,175.40 an ounce.

On Friday, gold prices gained $6.60 or 0.6 percent to settle at $1,185.80 an ounce, as the dollar weakened after some weaker than expected economic data from the U.S. Investors also sought the safe haven appeal of the precious metal over concerns of a Greek default on its sovereign debt after talks between Athens and its international creditors broke down last weekend.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 701.90 tons on Tuesday from its previous close of 703.98 tons on Monday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.03 on Tuesday, up from its previous close of 94.84 on Monday in late North American trade. The dollar scaled a high of 95.23 intraday and a low of 94.56.

The euro trended lower against the dollar at $1.1237 on Tuesday, as compared to its previous close of $1.1284 in North American trade late Monday. The euro scaled a high of $1.1331 intraday and a low of $1.1206.

On the economic front, a Commerce Department report on Tuesday showed housing starts pulled back more than expected in May, after reporting a sharp jump in new residential construction in the U.S. in the previous month.

Housing starts tumbled 11.1 percent to an annual rate of 1.036 million in May after surging 22.1 percent to a revised 1.165 million in April. Economists expected starts to drop to an annual rate of 1.090 million from the 1.135 million originally reported for the previous month.

Meanwhile, the report also said building permits, an indicator of future housing demand, jumped 11.8 percent to an annual rate of 1.275 million in May from the revised April rate of 1.140 million. Economists expected permits to drop to a rate of 1.105 million.

Eurozone employment increased slightly in the first quarter, Eurostat reported Tuesday. Employment rose 0.1 percent from the prior quarter, the same rate of growth as seen in the fourth quarter.

Germany's investor sentiment weakened for a third straight month in June to its lowest level in seven months as fears of a 'Grexit' intensified. The ZEW Indicator of Economic Sentiment fell more-than-expected to 31.5 from 41.9 in May, survey data from the Mannheim-based Centre for European Economic Research, or ZEW, showed Tuesday.

Economists had expected a reading of 37.3. The latest score was the lowest since November, when the reading was 11.5.

Germany's consumer prices increased for the fourth straight month in May at the fastest pace in seven months, as initially estimated, final data from the statistical office Destatis showed Tuesday. Consumer prices rose 0.7 percent from last year, following a 0.5 percent increase in April. The annual increase matched the preliminary estimate published on June 1.

The decline in U.K. consumer prices proved to be short-lived as they increased in May, while factory gate prices continued its downward trend, official data revealed Tuesday. Consumer prices rose 0.1 percent from last year as expected by economists, offsetting April's 0.1 percent fall, which was the first drop since 1960, the Office for National Statistics reported. This was the first rise in four months.

Another report from ONS showed U.K. factory gate prices decreased for the eleventh consecutive month in May mainly driven by petroleum and crude oil prices. Output prices dropped 1.6 percent from a year ago, in line with forecast, and slower than a 1.7 percent decrease in April. As expected, output prices edged up 0.1 percent for the third straight month on a monthly basis in May.