Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as stronger-than-expected US data put pressure on the precious metal.
The most active gold contract for December delivery fell $3.8, or 0.35 percent, to settle at $1,070.00 per ounce.
Gold was put under pressure as a report released by the US Department of Commerce showing the US new orders for manufactured durable goods in October increased $6.9 billion, or 3 percent to $239.0 billion, well above market consensus. This increase followed a 0.8-percent September decrease.
In a separate report, the department said the US personal income in October increased $68.1 billion, or 0.4 percent, on par with market estimates. Personal consumption expenditures increased $15.2 billion, or 0.1 percent, in October.
The US Federal Reserve watch the report closely, as increasing wages and salaries is an indication of inflation and less slack in the labour market, which the Fed is duty-bound to control.
Meanwhile, the US sales of new single-family houses in October 2015 were at a seasonally adjusted annual rate of 495,000, according to the Commerce Department on Wednesday. This is 10.7 percent above the revised September rate of 447,000 and is 4.9 percent above the October 2014 estimate of 472,000.
Analysts noted that inventory of properties for sale was the highest since early 2010 and that with the previous new home sales report showing a large decrease, this report helped US equities and put pressure on gold.
Analysts believe these positive data will make a strong case for the Fed to increase interest rates during its December Federal Open Market Committee (FOMC) meeting.
Expectations were originally for a delay in the rate hike until 2016 but the FOMC meeting in late October leave the door open for a possible rate hike by year-end. An increase in the Fed’s interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest.
There has not been an increase in the Fed’s interest rate since June 2006, before the beginning of the US financial crisis. The current implied probability of a December rate hike is at 78 percent, according to the CMEGroup’s Fedwatch tool. Gold was put under further pressure as the US dollar index rose by 0.2 percent to 99.80 as of 18:00 GMT. (source gold)
The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.
Silver for December delivery fell 0.1 cents, or 0.01 percent, to close at $14.158 per ounce. Platinum for January delivery added $2.2, or 0.26 percent, to close at $843.90 per ounce.